𝗧𝗥𝗨𝗠𝗣'𝗦 𝗧𝗔𝗥𝗜𝗙𝗙𝗦 𝗢𝗡 𝗠𝗘𝗫𝗜𝗖𝗢 𝗧𝗛𝗥𝗘𝗔𝗧𝗘𝗡 𝗠𝗔𝗝𝗢𝗥 𝗗𝗜𝗦𝗥𝗨𝗣𝗧𝗜𝗢𝗡 𝗙𝗢𝗥 𝗧𝗘𝗫𝗔𝗦 𝗘𝗖𝗢𝗡𝗢𝗠𝗬

some of the produce grown in Mexico and sold in Texas

Texas is bracing for a major economic shock as President Donald Trump prepares to impose sweeping new tariffs on imports from Mexico, the state’s largest trading partner. Starting August 1, a proposed 30% tariff could hit goods that have so far been mostly exempt under a temporary trade agreement, a change that experts warn could have devastating effects across key sectors of the Texas economy.

Since March, about 85% to 90% of Mexican imports have avoided U.S. tariffs thanks to a short-term agreement tied to the United States-Mexico-Canada Agreement (USMCA). That deal is now set to expire, and Trump’s administration has shown no signs of extending it. In a letter to Mexico’s new president, Claudia Sheinbaum Pardo, Trump confirmed the plan to hike tariffs unless a new trade deal is reached, leaving Texas businesses facing significant uncertainty.

The potential impact is enormous. Last year, trade between Texas and Mexico totaled $281 billion, accounting for a major share of the $840 billion in goods exchanged between the U.S. and Mexico. The relationship is especially important for Texas’ agricultural sector, where many companies operate on both sides of the border to maintain year-round production.

“This is a game changer,” said Dante Galeazzi, president of the Texas International Produce Association, which represents 400 companies importing or growing $13 billion worth of produce annually. “A 30% tariff fundamentally changes how we do business.”

Even short-term disruptions could ripple through the supply chain. Craig Slate, CEO of produce importer SunFed, said his company already weathered a brief tariff scare in March when a 25% duty was imposed and then quickly lifted. SunFed, which imports squash, peppers, melons, and more from Mexico, would be responsible for paying the new tariffs upfront. While those costs could be spread among suppliers, retailers, and consumers, Slate warned the bigger danger is long-term supply instability. Some growers and importers may choose to stop doing business with the U.S. altogether, leading to product shortages.

a few of the cars manufactured in Mexico and sold in Texas

The broader consequences are hard to overstate. The Federal Reserve Bank of Dallas has already reported rising costs in Texas manufacturing tied to existing 50% tariffs on aluminum and steel, and it projects that added tariffs could cut the state’s GDP by 1.5% and eliminate up to 100,000 jobs. Additional 50% tariffs on copper, set to begin Aug. 1, could further pressure Texas industries. According to the economic firm Trade Partnership Worldwide, the new tariffs could cost Texas businesses an estimated $6 billion.

Texas leaders are split on the issue. U.S. Rep. Tony Gonzales praised Trump’s tactics as an effective way to force negotiations, while Gov. Greg Abbott’s office framed the tariffs as a “rare chance” to realign global supply chains and attract new manufacturing to Texas.

Others are more cautious. Glenn Hamer, president of the Texas Association of Business, argued that Texas’ large and diverse economy may weather the storm better than most, but warned that a breakdown in USMCA protections could severely hurt small businesses. More than 92% of Texas exporters are small businesses, which may lack the flexibility to adapt quickly to shifting trade rules.

Economist Ed Hirs of the University of Houston summed it up bluntly: “It’s going to be devastating to U.S.-Mexico trade. This will be a very, very difficult realignment.”

For now, the clock is ticking. Unless a new deal is struck before Monday, Texas, long considered part of the backbone of U.S. trade, could find itself at the epicenter of a resurgent trade war, with far-reaching consequences for businesses, consumers, and workers across the state.