On Wednesday, President Donald Trump drastically hiked tariffs on trade between the US and other countries, concluded that credit rating agency Fitch is at its highest level since 1910.
Speaking to Newsweek Joshua Blank, who runs the Texas Political Project at the University of Texas in Austin, the Lone Star state said that foreign trade plays an important role in the economy and that “it feels more painful than most people” as a result of the Trump administration’s tariffs.
Newsweek contacted Texas Gov. Greg Abbott to comment on Friday via email outside of normal business hours.
Why is it important?
In recent years, Texas has seen its GDP growth rate increase by 4.8% in 2024, with an economy that is about three times the national average increasing by 4.8%.
According to federal economic analysis, Texas is the state with the second largest economy in the United States after California, and in 2023 if it is an independent state, it would have had the eighth largest economy in the world in 2023. Therefore, the change to the Texas economy has fundamental implications not only for the state but also for the nation.
What do you know
On Wednesday, called Trump’s “liberation day,” we saw the announcement of a wide range of new tariffs, including a “baseline” 10% tax on all imports, and what the president called a “discount round-trip tariff” in dozens of countries. These rates included 34% in China, 25% in South Korea and 20% in the European Union.
They were not mentioned Wednesday, but they were not mentioned shortly after Trump slapped 25% tariffs on all goods in Mexico and all Canadian production bars. He later announced a one-month delay in products compliant with the US-Mexico-Canada Agreement (USMCA) trade agreement that he approved in his first term.
According to the Economic Complexity Observatory, in 2023, Texas exported $486 billion worth of goods to foreign countries, the highest figure among American countries, and imported $38.4 billion.
Tim Warner/Saulrobe/AFP/Getty
2021 US Census Bureau figures show that Mexico is Texas’ largest foreign trade partner, and that Texas is importing $1000.3 billion worth of goods from the south of the border in return for its $123.1 billion in exports.
China is next on the list, with Texas importing $34.7 billion worth of goods against $21.6 billion in exports, followed by Japan importing $21.4 billion in imports. On Wednesday, Trump imposed a 34% tariff on China and a 24% tariff on Japan.
The top 10 foreign trade partners also included Canada, Vietnam, South Korea, Malaysia, Germany, Taiwan and Russia. Of these, only Mexico, Canada and Russia were missing the sudden new tariffs introduced on Wednesday in the first two cases, as large tariffs had already been introduced by the Trump administration.
What people are saying
Speaking to Newsweek, Joshua Blank said, “Texas is in a unique position that means feeling more pain than most people in response to some of the Trump administration. I’m sure Texas will feel a narrowing down from Trump’s efforts to reduce the federal workforce. The confusion over that will have immediate consequences for the Texas economy.
“In spite of the obvious exposure these policies bring to Republican officials, there’s no point here at least that anyone in state leadership is pushing back Texas’ interests – at least not public.”
In February, the Texas Business Association said: “International trade is important to the Texas economy, and is now the eighth and soon becomes the seventh largest economy in the world, already surpassing world economic powers such as South Korea, Russia and Australia.
“As the country’s top exporter for the 22nd year in a row, Texas thrives with strong trade relations that drive economic growth, support millions of jobs and ensure Texas companies are competitive in the global market.”
The official website of Texas Governor Greg Abbott said:
“Strategic locations, the largest US rail and road infrastructure, the largest US ports, entry ports, multilingual workforce, twice the national average workforce, a vibrant international banking center, a diplomatic hub of consulates representing around 90 countries, and Texas is a world trade power.
What will happen next
It remains to be seen whether Texas’ disproportionate dependence on foreign trade will mark an economic hit due to Trump’s tariffs, or whether companies that will bring more work back to the US as Trump intends to do so will outweigh this. If senior Republicans in the state are seriously affected, pressure will be put into words.
