The recent invasion of Ukraine by Russia is generating questions regarding how important Russia is to the Texas economy, particularly as policies restricting trade and investment interactions are implemented or contemplated. While no area can escape the near-term disruptive effects related to the supply chain and inflation, the specific effects on business activity within the state are relatively minor. The Perryman Group recently analyzed patterns in Texas-Russia trade and investment to assess the extent of the linkages and related economic effects.
Since the beginnings of people living in social groups millennia ago, goods have been exchanged in some form. Through imports and exports, consumer choice improves, prices are reduced, business opportunities escalate, and economies grow. The essential mathematics explaining the process were worked out in the early 1800s. Pandemic-induced supply chain snarls have illustrated the interconnectedness of the contemporary world and just how much consumers rely on a steady stream of imports.
In the midst of the pandemic's ongoing fallout, there was a bit of very good news for the economy earlier this month that, as with so many other things, did not get the attention it should have (or would have in different times). The United States-Mexico-Canada Agreement (USMCA) has now officially gone into effect. It has taken years to negotiate and ratify the agreement among the three nations, which updates and replaces the 1994 North American Free Trade Agreement (NAFTA).
Every day, nearly $1.7 billion in products cross the US-Mexico border. Trade volume has grown substantially, more than doubling over the past 20 years and up 55% between 2010 and 2018. In early 2019, in the midst of the ongoing trade war with China, Mexico emerged as the largest trading partner of the US. Millions of trucks cross the border each year, and delays at the border cause logistical problems. The current slowing on the US-Mexico border is reducing efficiency and could cost the US economy billions in output and hundreds of thousands of jobs if it persists.
In June, work was completed on an expansion of the Panama Canal, with hopes of increased trade between Asia and the US Gulf and East Coasts. The canal was originally completed in 1914 at a cost of more than $350 million dollars. It took a decade to build the lock canal stretching roughly 50 miles to connect the Pacific and Atlantic Oceans. The canal eliminates the need to travel around the southern tip of South America and shortens a sea journey from Asia to the US East Coast by some 8,000 miles.