Donald Trump's proposed 20 percent tax on Mexican imports gets cool Texas reception



Keep going to see images of what the the U.S.-Mexico border actually looks like. less President Donald Trump's proposal to add a 20 percent tax on imports from Mexico drew support from Lt. Gov. Dan Patrick and a chilly response from business interests.

Keep going to see images of what the the ... more President Donald Trump's proposal to add a 20 percent tax on imports from Mexico drew support from Lt. Gov. Dan Patrick and a chilly response from business interests. Photo: Julie Watson, Associated Press Photo: Julie Watson, Associated Press Image 1 of / 24 Caption Close Donald Trump's proposed 20 percent tax on Mexican imports gets cool Texas reception 1 / 24 Back to Gallery

AUSTIN -- A White House suggestion that the United States could add a 20-percent tax on imports from Mexico to pay for President Donald Trump's promised border wall drew a decidedly chilly response from business interests and Texas officials who warned it could adversely affect both the state's budget and business climate.

In Washington, Trump spokesman Sean Spicer added a surprising new twist about how the proposed border wall, which is almost universally supported by Texas officials, would be paid for, saying that Trump intends to fund it by imposing a 20-percent tax on all imports from Mexico.

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While Spicer, later in the afternoon, said the tax was just one of several options being considered for paying for the wall, the general reaction of Texas businesses was thumbs-down. They said it would have a dramatic in Texas, which imports far more from Mexico than from any other country.

Business trade groups in Austin said their initial reaction was that a new import tax would drive up the cost of good for Texans, and could adversely affect Texas' thriving import-export market if Mexico retaliates with new tariffs of its own.

In addition, they suggested that the proposal could worsen already-strained relations between the two countries, at a time when Texas businesses were counting on increased trade with Texas' southern neighbor as a hedge against a continuing sag in some sectors of the Lone Star economy.

"Texas' number one trading partner by far is Mexico, and imposing a 20 percent tax on Mexican imports to fund a border wall would hurt the Texas economy," said Chris Wallace, president of the Texas Association of Business. "This proposal could mean a loss of jobs and a hit to state tax revenues. We look forward to working with our Texas congressional delegation and our TAB members to address this proposal and I would encourage our state leaders to make the economic ramifications of this proposal known."

According to U.S. Census data. the top two busiest inland ports in the country are the Laredo and El Paso customs districts, both located near the border. In 2016, the Laredo districts posted well over $250 billion in two-way trade with Mexico, according to U.S. Census data. El Paso did more than $86 billion billion.

Gov. Greg Abbott, who has championed increased trade with Texas' southern neighbor since he became governor a year ago, had no immediate comment.

Lt. Gov. Dan Patrick, an outspoken supporter of the wall who served as Trump's campaign chairman in Texas, told Fox News that he was "not too concerned" at present about any adverse impact of such a tax. He suggested that the proposal might be "the first warning shot across the bow" fired by Trump, and that the tax could end up being something less.

"We need the wall," he told Fox News' Neil Cavuto. "It will work itself out."

State Rep. Cesar Blanco, an El Paso Democrat who chairs the House Border Caucus, said an import tax "will set back trade with our number one trading partner while devastating our state economy and border communities.

"Any tax imposed on Mexican imports will ultimately be passed on to the American and Texas consumer, he said. "So a 20 percent tax on Mexican imports means a 20percent tax on our middle class and working families. "

Federal statistics show Texas imported more than $84 billion from Mexico in 2015. Add a 20 percent tariff, and Texans would pay an additional $16.8 billion for the same goods and services.

"That would up the retail price," said a Houston importer who asked not to be quoted by name. "I'm for Mexico paying for the wall, but this is a bad way to do that."

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"There's a lot of cross-border trade that goes on in Texas, and I'm sure a lot of people on both sides of the border won't like this," said Vicente "Chente" Garcia, a landowner near Del Rio and longtime supporter of a wall, echoing the sentiments of other businessmen. "Nobody is going to like paying a tax. In Texas, this will make goods from Mexico more expensive. And who wants to pay more?"

Mexican imports into Texas have been estimated in recent years to total more than $84 billion a year, as part of more than $200 billion in annual trade between Texas and Mexico. Last year, in his first international trip as governor, Abbott visited Mexico to court additional trade between the two neighbors.

"This is a new chapter in the relationship between Mexico and Texas and a new beginning of what has been a rich history," Abbott told Mexican officials during his visit.

Predictably, Texas Democrats took issue with the proposal -- and used it as an opportunity to bash state GOP leaders.

"Texas' economy has already sunk from 3rd to 21st under Republicans Greg Abbott and Dan Patrick, now Trump is taking a shot at our jobs," said Crystal Perkins, the party's executive director.

She insisted that Trump's proposed import tax "will kill Texas jobs, raise the price of goods for Texas families, and slaughter Texas' relationship with its largest trading partner."