Why a trade war can jeopardize Texas jobs
America’s economy is booming, thanks in large part to the tax and regulatory policies of President Donald Trump. But trade barriers are putting that at risk — particularly in Texas.
Texas is the nation’s leading commodity exporter. We have oil and gas, sorghum, beef, cotton and many other products the rest of the world wants to buy. Last year, more than 40,000 companies in Texas exported more than $264 billion worth of goods. No other state came close to that amount. (California had the second-highest level of exports at a value of nearly $172 billion.)
A report by Trade Partnership Worldwide shows that nearly 3 million Texas workers had jobs supported by trade activities in 2016, in agriculture, manufacturing, energy and other industries. Many of these trade-related industries traditionally employ large numbers of Hispanic workers, who make up more than 35 percent of the overall labor force in Texas. That number is expected to increase over the next few years.
Washington’s trade policy has many Texas businesses — from big factories to family-owned farms — and their hardworking employees fretting. Will they become collateral damage in this ill-conceived trade war?
Texas has so much to gain from trade — and so much to lose when the government chooses to implement a tax on consumers and businesses in the form of tariffs. Our state’s Hispanic community has as much at risk as anyone.
Take steel and aluminum. While tariffs on those products imported from Canada, Mexico and the European Union were intended to be beneficial to some politically favored businesses (although even some of those are being harmed by tariffs), everyone else picks up the tab.
Tariffs represent a tax on consumers and businesses — paid by Americans, not foreigners. That limits economic opportunity and stifles growth.
“I am concerned that the new tariffs on steel and aluminum imports and other goods may threaten future economic growth both in our state and across the country,” wrote Gov. Greg Abbott in a recent letter to the president.
He noted that, according to census data, Texas imported more than $8.3 billion in steel and aluminum. That’s more than double any other state.
If shale exploration firms can’t absorb the new costs of steel products needed for oil exploration, production and revenue will decrease. Plans for expansion, like new hires and new facilities, will be postponed. Workers will be laid off. America’s largest nail manufacturer, based in Missouri, has laid off 60 workers because of soaring steel costs. What will happen in Texas?
Texans must also worry about retaliatory tariffs. When U.S. tariffs on Chinese imports kicked in a month ago, China immediately began imposing tariffs on a wide range of American products in return. Soybeans and pork are among the products subject to tariffs, and so are pecans, which were slapped with a 47 percent tariff.
Family-owned pecan farms and their workers are hoping the tariffs will disappear before harvest in October. If not, they stand to lose profits and jobs.
Abbott’s concerns are well-founded. Being the nation’s leading exporter means Texas has the most to lose if other countries levy tariffs on American products. But across the country, Americans are finding their living costs are on the rise. Hispanics and low-income workers are among those hurt the worst by trade restrictions and additional taxes.
Tariffs trigger a domino effect across a wide range of industries, affecting the entire supply chain. From the steel producers, to the machine manufacturers, to energy producers, to the retailers to the family filling up its tank at the gas station — when prices go up for one, prices tend to go up for all.
The result is Texas families and consumers facing higher prices on products they use every day, and Texas entrepreneurs having to face rising costs on goods and services they depend on to remain competitive.
If our economy is to continue growing, our government should focus on reducing trade barriers — not creating them. Families and entrepreneurs depend on the mutual benefits provided by trade. When barriers are knocked down, the economy can grow, and America will be better off.