President Trump has stated that he will impose a 5% tariff on all goods from Mexico on June 10 if Mexico does not take action to slow the volume of immigrants at the US border. The Perryman Group, an economic analysis firm based in Texas, analyzed the economic implications of such a tariff and found that it would likely cost hundreds of thousands of US jobs if enacted and maintained.
The current slowdown at the US-Mexico border is causing substantial economic harms. Trade volume has grown substantially, more than doubling over the past 20 years and up 55% between 2010 and 2018. During 2018, total trade volume between the United States and Mexico exceeded $611.5 billion, with $265.0 billion in US exports to Mexico and $346.5 billion in imports from Mexico. In fact, recent data for January and February of 2019 reveals that, for the first time, Mexico is the top US trading partner.
Import and export activity is an essential aspect of optimizing economic performance. By allowing each nation to focus resources on those goods and services where it has a competitive advantage and import other products, foreign trade helps improve business conditions and quality of life around the globe.
President Trump has signed the US-Mexico-Canada Agreement (USMCA) into law, replacing the 25-year old North American Free Trade Agreement. A strong trade agreement with Mexico and Canada is clearly a "win" for the US economy. Mexico has also passed the USMCA, and the ratification process is currently underway in Canada.
President Trump's recent announcement that the United States and the European Union (EU) would begin trade negotiations and work toward reducing constraints that could yield short-term success and help set the stage for other progress in the near future. EU members are major US trading partners, and, not only would a strong trade deal with zero tariffs have the potential to further enhance economies on both sides of the Atlantic, but also provide substantial benefits for the state of Texas.
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