Everything is bigger in Texas – even the impact of tariffs

By Michael Young

Did you know that China is Texas’s third largest export market?  Or that China is the second largest country of origin for Texas imports? Or that Texas is the third most popular U.S. state for Chinese foreign investment?  Like all things Texas, the impact of U.S.-China tariffs is bigger on the Lone Star state.

In a June letter to President Trump, Governor Greg Abbott noted, : “[The] tariffs set to go into effect on roughly $50 billion worth of foreign goods beginning this summer and China’s retaliatory tariffs also threaten the economies of Texas and other states particularly dependent on international trade with China.”

And, there is a reason that one of the official state government slogans for the state is: “Texas: It’s Like a Whole Other Country.” Texas has a disproportionate influence on the national and global economies, and as a result, has its own unique trade relationships with countries as diverse as Mexico and China. If Texas were a country, it would be the world’s tenth largest economy.

Needless to say, when the state economy feels a strain in commerce, there is an instant ripple effect that reverberates from the Gulf of Mexico to the East China Sea.

For example, after a 14-year-ban on U.S. beef exports was lifted last year, Texas cattle ranchers were excited about the Chinese market. Now they are nervous about a new beef tariff from China, fearing stifled income and growth.

As the top exporting state in the nation, the ripple effect from retaliatory tariffs from China hit Texans particularly hard. Hopefully cooler heads will prevail and the bilateral trade relationship between the United States and China will not only be repaired but strengthened.