Texas Businesses Reel as USMCA Uncertainty Deepens Trade Tensions

Texas businesses are bracing for financial losses due to the ongoing uncertainty surrounding the United States-Mexico-Canada Agreement (USMCA). The trade deal, which accounts for a significant portion of Texas' economy, has been in limbo since July 1 when the Trump administration announced it would not renew USMCA and instead put the agreement under annual review.

According to the article, Mexico and Canada are Texas' No. 1 and No. 2 trading partners respectively, with two-way trade between Texas and Mexico totaling $281.2 billion in 2024 and trade between Texas and Canada coming to $69.2 billion. This represents a significant portion of the state's economy, equivalent to 12%.

Companies such as Air Tractor, Inc., which manufactures aircraft for farming and aerial firefighting, are particularly vulnerable to the uncertainty surrounding USMCA. The company imports engines from Canada without paying a tariff due to the agreement, but if USMCA were terminated, it would be forced to pay a 25% tariff on those engines.

President of Air Tractor, Jim Hirsch, stated that if USMCA were terminated, the return of the tariff on Canadian aircraft engines would force him to increase the price of his planes by 12%, which could lead to 'deep cuts in staff and supply'.