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When it comes to trade with Mexico, no state has more to gain, or lose, than Texas. With San Antonio on the literal crossroads of that trade, recent federal proposals to curb immigration by imposing tariffs would have been catastrophic for a city that eagerly awaits passage of a new long-term trade agreement.
San Antonio business leaders and local officials gathered Monday at the site of the 1992 ceremonial signing of the North American Free Trade Agreement (NAFTA) to talk about how worsening federal trade relations could have a significant local impact. They urged stakeholders to push their legislators to ratify the U.S. Mexico Canada Agreement (USMCA) which has stalled since negotiations came to a close in November 2018.
“All of us here today are united in our desire to continue fostering the significant cultural and trade relationships we share with Mexico,” said Councilwoman Rebecca Viagran (D3) who is co-chair of the International Advisory Council of the San Antonio Economic Development Foundation (SAEDF). “I speak regularly with national and international corporations that consider the benefits of NAFTA when evaluating their relocation and expansion here in San Antonio. I’m also aware of how our local economy has benefitted from the passage of NAFTA.”
Those benefits include the creation of over 63,000 jobs in San Antonio between 1994 and 2016, she said, adding that the updated NAFTA will benefit local, national, and regional economies; facilitate trade; and promote labor, environmental and intellectual property protections. The USMCA also will benefit small and mid-size companies as well as larger businesses based here, such as Toyota Texas Manufacturing and the Zachry Group.
In Texas, trade with Mexico supports 700,000 jobs and, every year, a total of $173 billion worth of goods are exchanged between Mexico and the state, according to the Texas-Mexico Trade Coalition.
“With the major benefits that our country has had from NAFTA, bringing together the U.S., Mexico, and Canada in a great partnership, enabling us to compete with the rest of the world, you would think there would be no debate about this,” Bexar County Judge Nelson Wolff said. “It has tied us together for 20-some-odd years, and to see what we’re seeing today in terms of the turmoil that’s occurred, makes us all a little bit worried.”
Wolff called the White House-proposed tariffs “a tax we would all have to pay,” to remedy a problem that’s not related to trade. Though the administration reached a deal on immigration Friday ahead of the deadline to begin imposing tariffs, President Donald Trump on Sunday suggested he might again weaponize trade to punish Mexico.
Such tariffs could have an estimated $2 billion impact on Toyota alone, he said, and affect the jobs of the 7,000 people who work at the plant here. As the Toyota Corporation considers where in North America to invest an additional $400 million in technology upgrades at one of its plants later this summer, San Antonio stands to win big. But there are four other locations in the running.
“What this [trade issue] does to it, I don’t know,” Wolff said. “We should all worry about it because of all the jobs that are tied to the NAFTA agreement. Just look at H-E-B and what a great impact that is. [The company has] over 50 stores in Mexico today, generating some $1 billion in annual sales, and it continues to grow. We don’t want to have anything at the national level jeopardize those efforts.”
Wolff also pointed to the North American Development Bank, or NADBank, as another NAFTA success story. Since its inception, NADBank has financed 257 environmental infrastructure projects along the U.S.-Mexico border benefitting 17 million residents on both sides of the border. Officials are hopeful the USMCA will make NADBank, which is headquartered in San Antonio, even stronger.
“San Antonio is on the NAFTA highway,” said Eddie Aldrete, chairman of the Texas-Mexico Trade Coalition and IBC Bank executive. “A lot of the roads and railways intersect through San Antonio, coming here or passing through. So our city benefits in a variety of ways.”
Many people forget why NAFTA was created in the first place, he said, and that was to bring the three countries together to create a trading bloc to compete against Asia and Europe. “The critical thing about NAFTA is it provided us with certainty, prosperity, and new opportunities,” Aldrete said, and that’s what is expected of the new-and-improved agreement.
“While we are pleased the tariffs on Mexican imports have been suspended, we are concerned that as long as the threat of the tariffs hangs out there, it creates an era of uncertainty,” Aldrete said. “In uncertainty, foreign investment has the potential to freeze. That means new companies, new jobs, and new paychecks in San Antonio are on hold.”
Business leaders also say it is logistically difficult to levy tariffs on goods coming from Mexico. While imports from countries like China tend to be a completed product, the U.S. now has a supply chain with Mexico with parts and components that cross the border multiple times in the production process.
“At Avanzar, it is imperative that tariffs not come into play,” said Berto Guerra, chairman and CEO of Avanzar Interior Technologies, the largest supplier to the Toyota Texas Manufacturing plant and a co-owner of three local auto dealerships. “We build roughly 240,000 vehicles for Toyota Texas – pretty much everything inside the cab – but we bring product from Mexico, like our seat covers that come from Juarez, and then we build them here.”
The San Antonio-based company also builds another 160,000 seats and interiors which are shipped by rail and truck to Baja California, in Mexico, for Tacoma trucks that are then shipped back to auto dealers here and across the country. Avanzar recently completed construction of a plant in Guanajuato, Mexico, to support manufacturing the Toyota Tacoma. Jobs in Guanajuato could be affected by the threat of tariffs and ripple across the border to Avanzar in San Antonio, impacting consumers all over.
“Tariffs are passed on to the consumer,” he said. “At a certain point, the consumer won’t be able to afford these vehicles. When it becomes unaffordable, they don’t buy our vehicles [and] we don’t have jobs.” Last year, automakers passed on the higher cost of doing business from steel and aluminum tariffs.
The Economic Development Foundation has been very focused on the issues over trade with Mexico, said SAEDF President and CEO Jenna Saucedo-Herrera. “Last year, we had multiple projects in our pipeline that were deferred, delayed, or canceled entirely because of the uncertainty at the federal level specifically related to trade issues.”
This year, things have been moving, Saucedo-Herrera said.
“But right now, that Toyota investment is top of mind for us,” she said, “not just for what that investment would mean to our region, but all of the different potential supplier networks that would be related to it.”