Economist warns tariffs on Mexico would hurt ETX

Economist warns tariffs on Mexico would hurt ETX
Last week we saw another tariff on two hundred billion dollars’ worth of Chinese goods, and Rashid Al-hmoud, Ph.D, an economics professor at Texas Tech University, said there is talk that there will be a tariff on another 300 billion dollars on imported items.

TYLER, Texas (KLTV) -This week President Donald Trump announced a five percent tariff on all products from Mexico in response to the ongoing migrant crisis at the border.

As GMET’S Brennon Gurley reports, it’s an issue that could have a large impact on local trade, the economy and the price of goods.

President Trump’s intention to impose a five percent on all Mexican goods coming into the country would end up hurting East Texans, according to Dr. Ray Perryman, CEO of the Perryman Group.

It’s just bad economic policy. It’s not going to solve any problems he’s trying to solve. It causes a lot of economic harm. Free trade is the best way to grow an economy,” explains Dr. Perryman.

Tariffs will begin June 10th and will increase by five percent each month-up to 25 percent- until October if Mexico does not stop the flow of undocumented migrants from reaching the U.S. Mexico border.

“Even the announcement of these things if they don’t follow through is disruptive because it makes investors nervous, it makes producers nervous, and people just don’t want to invest in an uncertain environment,” adds Perryman.

If the five percent U.S. tariff on all good from Mexico takes effect and is maintained, more than 400,000 jobs in the U.S. could be lost, according to Perryman.

A huge part of the impact about 30% hits here in Texas because our close linkage with Mexico and linkage with border economy and we’re looking at losing over 100,000 jobs here in Texas with just a 5% tariff,” says Perryman.

Experts say some goods could be taxed multiple times, since the cross the border more than once during production and would face a tariff each time.

Ultimately cost increases, most of them get passed on to consumers and they do bare the brunt of it and here we’re talking about our agricultural products, we’re talking about automobile, electronics. We’re talking about a lot of things that are vital part of what consumers spend money on.”

Dean Cagle is the owner of Cagle Auto Group in Tyler. He’s not sure if or how his business would be affected but says the effects could be damaging.

“A Chevy Silverado for GM, 45% of the parts that go into a Silverado are from Mexico. So, you know how many Silverado’s are sold and same thing for Fords,” explains Cagle.

Cagle says the higher cost will trickle down to consumers and could have several impacts.

You probably at some point either as a new car salesman or used car dealer you’re going to have to explain it to the consumer hey this is not my fault and this has just been imposed upon,” adds Cagle.

Economists say this is a significant issue, but not one that can be solved through tariffs.

We need to attack the root problem and not just try to put some kind of ineffective inefficient band-aid around it and claim we’re solving the problem,” says Perryman.

For now, experts are playing the “wait and see” to better understand how the tariffs may impact the economy.

“It’s a complex process but there’s no part of it that’s good,” explains Perryman.

Right now, it’s unclear whether the tariffs will go into effect, an immigration solution will be drafted, or if no change will occur.

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