Texas Businesses Scramble as USMCA Trade Agreement Remains in Limbo

The USMCA trade agreement is in limbo, and Texas businesses are navigating choppy waters. The state's economy relies heavily on trade with Mexico and Canada, its top two trading partners.

Air Tractor, Inc., a North Texas aircraft manufacturer, has seen success thanks to the USMCA. However, President Trump's threat to terminate the agreement and impose tariffs on Canadian imports puts their business at risk. The company's president, Jim Hirsch, said that if the agreement is terminated, they would have to increase prices by 12% due to a potential 25% tariff on Canadian engines.

Tony Payan, director of the Claudio X. Gonzalez Center for the U.S. and Mexico at Rice University's Baker Institute, believes Trump is pushing for maximum leverage rather than aiming to kill the USMCA. Even if the agreement were terminated, it would remain in force for another 10 years while trade negotiations continue on an annual basis.

The uncertainty surrounding the USMCA has already affected businesses in Texas and Mexico. Companies are withholding investment due to the lack of clear trade policies. In the Borderplex region, projects have been put on hold as companies await a resolution to the USMCA's fate.