In his first term, Donald Trump made a significant impact by raising tariffs on Chinese goods. Now, the question arises – what will he do in his second term? Raymond Robertson, the director of the Mosbacher Institute for Trade, Economics, and Public Policy at the Bush School of Government at Texas A&M, sheds light on the topic in a recent interview with Texas Standard.
Robertson points out that President Biden has already started imposing tariffs on Chinese electric vehicles (EVs) earlier this year, with rates as high as 100%. This strategy is expected to continue in the next administration, as both Biden and Trump have similar trade policies that involve high tariffs and anti-trade measures.
The conversation then delves into the effectiveness of tariffs in boosting the economy. While some believe that tariffs can lead to increased prices for Americans and hinder economic growth, Robertson emphasizes that putting tariffs on intermediate goods used in production can actually reduce employment opportunities in the short and long term.
Despite the similarities in trade policies between Biden and Trump, the focus remains on Trump’s more aggressive stance on imposing tariffs globally at higher rates. This could have significant economic implications, especially for states like Texas, which heavily rely on trade with Mexico, their number one trading partner.
The discussion highlights the interconnected nature of trade between Texas and Mexico, particularly in the auto industry. Mexico plays a crucial role in supplying car parts to auto producers in Texas, and any increase in tariffs could lead to higher prices for cars or a decrease in the workforce required to manufacture them.
With the new president of Mexico showing less enthusiasm for free trade and a potential for retaliatory tariffs, the likelihood of a trade war looms large. This could have detrimental effects on both sides of the border, impacting workers and economies in regions like San Antonio and the Dallas-Fort Worth area.
Robertson stresses the importance of promoting trade with Mexico to maintain jobs and economic stability on both sides. Texas and Mexico are part of a shared labor market, and barriers to trade could ultimately hurt both economies.
In conclusion, the interview underscores the complexities of trade relations and the potential consequences of escalating tariff disputes. It serves as a reminder of the interconnectedness of economies and the need for thoughtful and strategic trade policies to support growth and prosperity for all involved.
