85R15174 KSM-D
By: Blanco H.C.R. No. 98
CONCURRENT RESOLUTION
WHEREAS, The White House has raised the prospect of a
substantial tax on imports from Mexico, but economists and business
leaders have warned that such a measure would have a severe negative
impact; and
WHEREAS, Although the imposition of tariffs is intended to
make American companies more competitive, the benefits are both
limited and outweighed by numerous and substantial risks, according
to economists across the political spectrum; this is the case
whether tariffs are imposed directly or through a border-adjusted
tax that subsidizes exports; and
WHEREAS, Any border tax would hurt U.S. consumers; tariffs
are effectively paid by the purchasers of goods, and as imported
goods became more expensive, so would any domestic goods that are
reasonable substitutes; in turn, the cost of living would soar,
affecting lower-income Americans the most, as they spend a higher
percentage of their income on goods, especially those produced
abroad; and
WHEREAS, Costs would also rise for U.S. manufacturers of
products that incorporate materials made in Mexico and subject to a
border tax; the enactment of tariffs could cause delays or price
spikes that spiral through the economy and interrupt complex,
time-sensitive supply chains; any slowdown could mean layoffs among
producers and damage to the broader U.S. economy; and
WHEREAS, Jobs would also be lost because of the inevitable
decline in the value of the Mexican peso; the loss of purchasing
power by our trading partner would lead to a drop in U.S. exports,
thereby putting Americans out of work; this would cause havoc in
both the Mexican and U.S. economies, according to former U.S.
Treasury Secretary Lawrence Summers, now a Harvard University
economist, who said that "it would be one of the best things that
ever happened for Asian and European competitors"; and
WHEREAS, If the United States imposes a tariff, Mexico will
no doubt retaliate, resulting in a pernicious trade war; most
experts believe that this would deliver a significant blow to the
economy, and Peter Petri, a professor of international finance at
Brandeis University, has suggested it could take years to rebuild
supply chains disrupted by such conflict; Simon Johnson, a
professor of entrepreneurship at MIT's Sloan School of Management,
has cautioned that the impact would be "much worse than a
recession," and more on the scale of a full-blown financial crisis;
Princeton University historian Sean Wilentz has offered the example
of the Smoot-Hawley Tariff, signed into law by President Herbert
Hoover in 1930, which sparked a trade war that devastated the global
economy; and
WHEREAS, A border tax would be particularly crushing in
Texas; Mexico is far and away our state's top trading partner, as
the Texas Association of Business observed in speaking out against
an import tariff; in 2015, trade between Texas and Mexico amounted
to over $176.5 billion, representing more than a third of our total
trade, with a surplus of $8 billion on our side; as of 2014, almost
400,000 Texas jobs depended on that trade, according to the Wilson
Center Mexico Institute; some Texas businesses have already
suffered due to the mere threat of a trade war, which has driven the
peso to a near all-time low and weakened the purchasing power of
potential customers from Mexico; the effect has been particularly
troubling in such border communities as El Paso, where one in every
four jobs relies on cross-border trade; and
WHEREAS, In 2015, Texas imported $84 billion from Mexico, and
with a 20 percent tariff, businesses and consumers would have paid
$16.8 billion more for the same goods and services; residents
particularly depend on the availability of agricultural products
from Mexico, and a border tax would drive up the cost of healthful
fruits and vegetables; moreover, many large-scale agricultural
concerns in Mexico are owned by American companies; and
WHEREAS, Trade has historically been an engine of prosperity,
benefiting consumers and businesses alike; Mexico is the nation's
third-largest trading partner, and a tariff or border-adjusted tax
on imports would drastically suppress commerce, to the tremendous
detriment of our state and nation; now, therefore, be it
RESOLVED, That the 85th Legislature of the State of Texas
hereby respectfully urge the United States Congress and the United
States president to reject the imposition of an import tax or border
adjustment tax on trade with Mexico; and, be it further
RESOLVED, That the Texas secretary of state forward official
copies of this resolution to the president of the United States, to
the president of the Senate and the speaker of the House of
Representatives of the United States Congress, and to all the
members of the Texas delegation to Congress with the request that
this resolution be entered in the Congressional Record as a
memorial to the Congress of the United States of America.