Trump tariffs set to hit Texas’ biggest trading partners beginning next week

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WASHINGTON — President Donald Trump said Thursday that he will implement 25% tariffs on Canada and Mexico starting Tuesday, adding punishing restrictions on Texas’ biggest trading partners.

Trump initially ordered the tariffs last month, saying they were necessary to push Canada and Mexico to do more to prevent illegal drugs from entering the United States. Trump delayed the tariffs by a month after Canada and Mexico announced moves to address illegal drug trafficking.

In a social media post, Trump said that the tariffs “will, indeed, go into effect, as scheduled.” Trump also announced a further 10% tariffs on China to go into effect Tuesday. He went through with a 10% tariff on China last month.

“Drugs are still pouring into our Country from Mexico and Canada at very high and unacceptable levels,” Trump wrote. “A large percentage of these Drugs, much of them in the form of Fentanyl, are made in, and supplied by, China.”

Trump delayed the tariffs earlier this year after both Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau took moves to harden illegal border traffic. Sheinbaum and Trudeau announced earlier this month that they would each send 10,000 soldiers to the border to target fentanyl. Trudeau also announced the creation of a “Fentanyl Czar” and intelligence sharing with the U.S. to target criminal organizations.

Mexico is Texas’ biggest trade partner by far. Trade between the two totaled more than $272 billion in 2023, according to the governor’s office. Texas imported more than $142 billion in Mexican goods that year, all of which would be subjected to the tariffs.

Mexico, Canada and China have also threatened retaliatory tariffs on the United States, jeopardizing Texas exports to the countries.

Texas’ business community, including members who otherwise support the president, have been on edge about the tariffs, saying they would have a devastating impact on the state’s economy.

“We need a strong North America, and that means keeping North America tariff free and, if anything, working on ways to reduce non-tariff barriers between Mexico, Canada and the United States,” Glenn Hamer, CEO of the Texas Association of Business, said after Trump’s tariff announcement.

The Texas Association of Business supports other Trump priorities, including the free trade agreement Trump negotiated during his first presidency with Canada and Mexico, the Republican-led 2017 tax cuts and the repeal of former President Joe Biden’s climate restrictions on Texas’ oil and gas industry.

Producers often pass the cost of tariffs to consumers by raising prices — which free-trade advocates say would be counterproductive to Trump’s campaign goal of lowering everyday costs.

Even if the tariffs aren’t implemented, they are having a chilling effect on investments due to the uncertainty of the future economic landscape, Hamer said.

“Businesses like predictability,” Hamer said.

Texas’s relatively loose regulatory environment has allowed it to have one of the fastest growing economies in the country. It has the largest gross domestic product of any state aside from California and a larger gross domestic product than Russia, which Gov. Greg Abbott often jokes makes him more powerful than Russian President Vladimir Putin.

Abbott's office said in a statement that the governor agreed with the goal of the tariffs to reduce illegal drug trafficking and that he stood by whatever tactics Trump deployed.

“Fentanyl made and exported by China and smuggled across our borders by dangerous cartels is a clandestine killer whose sole purpose is to kill unwitting young Americans, and is the leading cause of death for Americans between the ages of 18-45,” said Andrew Mahaleris, a spokesperson for Abbott. “Governor Abbott fully supports President Trump using every tool and strategy to protect Americans from this deadly crisis.”

Several of the state’s key industries would be immediately impacted. Texas contains about a third of the country’s refining capacity — more than any other state — and refines crude oil imported from Canada and Mexico, according to the Energy Information Administration. Canada is responsible for more than half of crude oil imports to the U.S. Mexico comes in a distant second place at about 10% of imports. Trump announced earlier this month that Canadian energy imports would be subjected to a lower 10% tariff rate.

During his first presidency, Trump imposed several tariffs on China, which upset the state’s agriculture industry. When China retaliated with its own tariffs, Texas farmers lost buyers in China, which looked for alternative markets such as Brazil. The Trump administration pushed for relief aid for farmers at the time, though some Republicans criticized the move as government handouts. Secretary of Agriculture Brooke Rollins said she would support additional aid to help farmers reeling from tariffs.

There is still a chance the tariffs do not go through. Sheinbaum said during a Tuesday morning news conference that she was continuing discussions with the Trump administration and is “expecting to reach a deal with the United States.” But Trump has not revealed what action would prevent implementation of the tariffs.

If they do go through, Hamer said, “it’s brace for impact.”

Disclosure: Texas Association of Business has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

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