Houston to suffer from trade blowback
“We have to send a signal to policymakers in Washington and emphasize that we are not sitting still.” Raúl Urteaga Trani, Mexico’s Secretariat of Agriculture
President Donald Trump’s foreign policy is endangering Houston’s economy.
As the nation’s leading exporting city, our region is particularly vulnerable to blowback from Trump’s clumsy and boorish behavior on the world stage. Whether it’s Mexico looking for new international suppliers or the leaders of Canada, Germany and France declaring Trump an unreliable ally, our president is alienating the customers for most of our goods.
Trump’s International Trade Commission picked a fight with Canada last week by voting to continue an investigation into whether aircraft maker Bombardier’s trade practices are hurting Boeing’s sales. Trump has also proposed banning imports of Canadian softwood and questioned the national security implications of importing Canadian steel and aluminum.
Canada is our second-largest trading partner after China, with $544 billion in goods and services crossing the border in 2016. Texas accounted for $35 billion of that. Canada, along with Mexico, is part of the North American Free Trade Agreement, which Trump wants to begin renegotiating in August.
Trump’s actions have shaken the confidence of our northern neighbor.
“International relationships that had seemed immutable for 70 years are being called into question,” Canadian Foreign Minister Chrystia Freeland told Canada’s House of Commons. “The fact that our friend and ally has come to question the very worth of its mantle of global leadership puts into sharper focus the need for the rest of us to set our own clear and
sovereign course.”
Freeland said Canada will support multilateral diplomacy and trade agreements, the very type of treaties that key Trump adviser Steve Bannon has sought to shatter. In the face of repeated insults and disrespect, Mexico is also seeking alternatives.
Mexico is the third-largest market for U.S. agricultural goods, buying $18 billion of our exports in 2016. But in the first four months of 2017, Mexican imports of U.S. soybean meal have dropped 15 percent, the first slide in four years, according to the Wall Street Journal. U.S. exports of chicken meat were down 11 percent, and corn was down 6 percent, according to Department of Agriculture data.
The decline is due to the Mexican government sponsoring trade missions to Latin America in search of new suppliers.
“We have to send a signal to policymakers in Washington and emphasize that we are not sitting still,” Raúl Urteaga Trani, head of international affairs for Mexico’s Secretariat of Agriculture, told the Journal. Brazilian chicken sales to Mexico have surged to 52,800 metric tons last year from 387 metric tons in 2013, according to the U.S. Poultry and Egg Export Council.
That’s bad news for Texas, where trade with Mexico brought in $174 billion in 2016. Even Texas conservatives are worried that Trump could hurt Texas’ economy by ruining NAFTA.
“Texas needs to take the lead when it comes to NAFTA 2.0,” U.S. Rep. Will Hurd, a San Antonio Republican, told a conference last week at the George W. Bush Presidential Center. “It’s a big issue, and it’s a complicated issue, but it starts with us continuing to educate our fellow citizens, and me educating my colleagues.”
America’s largest trading partner, though, is the European Union, where leaders are even more doubtful about Trump. German Chancellor Angela Merkel declared the beginning of a new trans-Atlantic chapter after her meeting with him last month.
“The times in which we could completely depend on others are, to a certain extent, over,” she said. “I’ve experienced that in the last few days. We Europeans truly have to take our fate into our own hands.”
Merkel was speaking at a campaign rally, and based on my conversations with German friends earlier this month, standing up to Trump is boosting her popularity. French President Emmanuel Macron’s party won 60 percent of the seats in parliament last week after he mocked our president.
Macron has proposed responding to Trump’s “America First” policy with a “Buy European Act,” which would make it harder for U.S. companies to bid on EU public contracts. He also wants to restrict foreign companies from taking over EU firms deemed strategically important.
The Trump administration is learning that for every nationalist, protectionist step it takes, foreign leaders have a countermeasure ready. They will not be cowed. Diplomacy is based on courtesy and reciprocity, and without them, relations sour and trade withers.
Texas exported $236 billion in goods in 2016, much more than it imported. Exports supported more than 394,000 Houston jobs in 2016, according to the Greater Houston Partnership.
Keep those workers in mind the next time Trump is snubbing foreign leaders or blowing up international agreements, because they are the ones who will pay the price. Chris Tomlinson is the Chronicle’s business columnist. chris.tomlinson@chron.com twitter.com/cltomlinson www.houstonchronicle.com/ author/chris-tomlinson