Houston's biggest industries may be scrambling to manage escalating costs next month if President Donald Trump follows through with his threat to place tariffs on all goods imported from Mexico, Houston's largest trading partner.

The president on Thursday night tweeted that the U.S. will impose a 5 percent tariff on all Mexican goods on June 10, which would gradually increase until the influx of immigrants and asylum seekers at the Mexican border ceases.

If the tariffs are implemented, the impact to Houston's economy would be profound, pushing up costs for everything from automotive parts to Mexican crude oil and food, beverages and produce.

Trade between Houston and Mexico averages $23.4 billion per year, according to estimates from the Greater Houston Partnership, and about 75 percent of U.S.–Mexico land trade, worth approximately $343 billion in 2015, crosses through a Texas port of entry, according to research by the Federal Reserve Bank of Dallas.

The value of trade between Houston and Mexico has gradually expanded since 2016, primarily due to the growth in the price of fuels, oil and refined products. In the last year, trade between the local economy and the Mexico increased 22.7 percent, up to $24.6 billion.

Whether the tariffs will be imposed remains uncertain. Immediately following the President's tweet, Mexico President Andrés Manuel López Obrador responded with a letter requesting the matter be resolved with dialogue. Mexican officials traveled Friday to Washington to meet with U.S. representatives in person regarding the dispute.

Fuels, oil and refined products, iron or steel, and motor vehicles and parts make up the bulk of imports from Mexico to Houston, and would prove the most costly for the local economy.

The most impacted sector for Mexico would be manufacturing, according to analysts from JP Morgan Chase, which could threaten businesses that trade with Houston companies.

Several manufacturers, particularly in the automotive industry, ship parts back and forth from Texas to Mexico on a daily basis, completing one part of the vehicle in one country and finishing it in another.

This symbiotic relationship poses a problem for businesses and Texas' economy when trade agreements are threatened, said Jesus Cañas, a senior business economist with the Federal Reserve Bank of Dallas. This manufacturing process essentially means that companies may pay tariffs multiple times in order to assemble one product, and cross-border manufacturing operations are an important part of corporate strategy to achieve competitively priced goods in the U.S., according to recent analysis by Cañas.

"They need these inputs every day, so if we have disruptions that worries me a lot," said Cañas in a previous interview with the Houston Chronicle. "(Disruptions) eventually could damage the competitiveness of Texas businesses."

If tariffs are imposed, they could represent a potentially serious blow for the Texas oil and gas sector, in particular raising costs for Gulf Coast refineries configured to process heavier grades that rely on Mexican crude. With sanctions on Venezuela limiting the amount of heavy crude inputs to Houston refineries, companies may have to absorb any cost increases due to the tariffs, as it is difficult for refineries to reconfigure their facilities to use much more of the lighter domestic crude oil being produced in West Texas.

U.S. refineries imported more than 660,000 barrels of oil from Mexico in February, more than any nation besides Canada, according to the U.S. Department of Energy.

"Refineries can switch over to lighter feedstocks of crude, but it's less efficient and less profitable, for sure," Herbert said.

The President's threat already hit oil and gas on Friday as oil prices fell to their lowest levels since February. The U.S. benchmark West Texas Intermediate was below $56 per barrel, a 2 percent drop from Thursday's close.

With global demand growth for crude half of what was forecast over the last three months of 2018, the potential for continuing price declines is high, said Bill Herbert, managing director at Houston-based Simmons Energy.

"People are running for the hills and asking questions later, and I don't think that's going to stop until we get a cessation in the rhetoric from the White House," he said. "Oil prices have been falling since mid to late-April. It's predominantly trade and growing fears of economic deceleration."

Local business leaders condemned the President's statement on Friday, commenting that it would hurt Texas and does little to correct the immigration system.

"Immigration will not be resolved by tariffs; however, trade can be used to induce cooperative partnerships," Eddie Aldrete, the chairman of the Texas Mexico Trade Coalition, wrote in a statement. "Illegal immigration is an issue that impacts both Mexico and the United States and is, therefore, an issue we need to work on together, side by side."

READ MORE about how tariffs will impact Texas on HoustonChronicle.com

--With assistance from Jordan Blum.