USMCA Uncertainty Hits Texas Businesses Hard

The United States-Mexico-Canada Agreement (USMCA) has Texas businesses navigating uncertain waters, particularly in trade and investment. Mexico and Canada are Texas' No. 1 and No. 2 trading partners, accounting for $281.2 billion and $69.2 billion in two-way trade, respectively, which is equivalent to 12% of the state's economy.

The USMCA pact facilitates a relationship between Air Tractor, Inc., an aircraft manufacturer based in North Texas, and Pratt & Whitney Canada, its engine supplier. President and CEO Jim Hirsch said if USMCA were terminated, his company would have to increase plane prices by 12% due to the return of a 25% tariff on Canadian engines.

Other companies are similarly concerned about the uncertainty surrounding the agreement's future. Tony Payan, director of the Claudio X. Gonzalez Center for the U.S. and Mexico at Rice University's Baker Institute, said Trump is likely pushing for maximum leverage rather than aiming to kill the USMCA.