370,000 jobs and $47 billion a year in GDP: This American state could be disproportionately impacted by Donald Trump's tariffs; here's why

The Trump administration's efforts to enforce tariffs on imports from overseas have provoked fears of the potential effect it can have on the US economy, especially in some states. Texas will be the most impacted by the tariffs, reported Moneywise.

Economists have projected that the state will lose 370,000 jobs every year and its GDP will decline by $46 to $47 billion due to the repercussions of tariffs, mainly those imposed on Mexico and Canada, as per the report.

Why Texas Could Be Hit Hardest?

Texas, with its proximity to Mexico, has long enjoyed a strong economic relationship with its neighbour, according to the report. As the top trading partner of the state for nearly two decades, Mexico buys a huge portion of goods from Texas, as per Moneywise. In 2024 alone, Texas exported $123.5 billion in goods to Mexico, making up 27% of its total exports, according to the report.


CEO of economic research company Perryman Group, Ray Perryman said, "We buy a lot of things from Mexico. Mexico buys a lot of things from us. For the last 30 years, we've stitched these economies together. They're really integrated in some fundamental ways. And when you rip those seams apart, you're going to start seeing some pretty significant impacts," quoted Moneywise.

Canada was Texas' other second-largest trade partner, supplying $36.6 billion worth of trade, as per Moneywise. Texas also traded with the Netherlands, South Korea, and China, the report added.

The Ripple Effect on Texas' Economy

Since Texas depends a lot on trade with Mexico, the imposition of new tariffs and retaliatory actions by both countries are likely to increase the prices of goods, according to Moneywise. The construction sector of the state is especially vulnerable, as per the report. Texas imports much of its steel and timber from Canada to construct houses, with higher tariffs on these raw materials, construction prices will go up, making houses more expensive and possibly fewer affordable houses available for people, reported Moneywise.

Perryman emphasized that the tariffs would be "Fundamentally changing a system that's evolved over a long time that works really well and has produced a lot of benefits," as quoted in the report. He also mentioned that "When you start interfering with that and dismantling that, you're going to see some significant consequences that really do work their way through a lot of different crevices in the economy," quoted Moneywise.

FAQs

How much does Texas export to Mexico?
Texas exported $123.5 billion worth of goods to Mexico in 2024, which was 27% of the state's total exports, reported Moneywise.

What’s the estimated job loss in Texas due to tariffs?
Economists predict Texas could lose 370,000 jobs every year because of the tariffs and trade disruptions.