Utah would be among the states hurt the most if President Donald Trump follows through with threats to impose tariffs beginning Monday on goods from Mexico in an attempt to force it to crack down on immigrants headed to the United States.
As a share of its overall economy, Utah ranks No. 7 among all states as the most dependent on imports from Mexico, according to research by The New York Times. The Beehive State’s Mexican imports amount to 2% of its gross domestic product.
“About 25% of Utah’s imports come from Mexico and that equates to roughly $3.6 billion per year of products,” said Miles Hansen, president and CEO of World Trade Center Utah.
The proposed 5% tariff, a tax added on goods at the border, “would equate to roughly $180 million of additional costs for Utah businesses,” he said.
It would affect the price of everything from motor vehicles to car parts, medical equipment, metal products and food, he said. “It really impacts a broad set of industries here in Utah for both businesses and consumers.”
Hansen said that, initially, the higher costs would be passed on to Utah consumers, not people in Mexico.
“Whether it’s a business or consumer who is buying products from Mexico, starting Monday — if the tariff goes into effect — they would see a 5% tax on those goods,” he said. “With time, companies can work with their suppliers in Mexico to try to get their Mexican suppliers to bear all or a share of the tax. But that will take time, and almost certainly still will result in additional costs for Utah businesses and consumers.”
(Francisco Kjolseth | Tribune file photo) Helizandro Mojica, 11, helps his mother Teresa Sotelo picking out fruits and vegetables on June 20, 2018, at Rancho Market at North Temple and 900 West. Fruits and vegetables imported from Mexico could rise in price if a 5% tariff on them proposed by President Donald Trump is imposed Monday.
Utah Farm Bureau President Ron Gibson is concerned, too.
“Tariffs never help Utah agriculture, especially those with such a large trading partner,” he said. Gibson is a dairy farmer, and notes that 20% of all Utah dairy products are exported — and 25% of those exports go to Mexico. “It may not seem like that much. But it we have product we can’t sell, it makes a huge difference.”
Gibson also raises onions. “There are times of the year that we import onions from Mexico here, and times we export ours to Mexico because of the different harvest seasons,” he said. “Mexico is almost just like another state. It’s nearby” and each depends on the other.
“Tariffs disrupt the trade system we have worked out,” he said.
Hansen said concern about the tariffs is rising among Utah businesses. Also, Sen. Mitt Romney, R-Utah, criticized plans for the tariffs last week.
“There is hope that enough progress can be made on immigration so the administration doesn’t move forward with the tariffs — or if they do, that they are very short-lived,” Hansen said.
However, Trump tweeted this week that progress in U.S.-Mexico talks has been unsatisfactory. He plans to ramp up his tariffs on Mexican goods gradually to 25% by October to pressure Mexico.
Hansen said that while solving immigration problems is important, Utah businesses generally dislike using tariffs as a weapon in fights over policy unrelated to trade.
“There simply are levers other than trade policy to get more Mexican cooperation to address these issues,” Hansen said. Using trade policy “leads to uncertainty for businesses. And that uncertainty can have a dampening effect on economic growth.”
He notes that Utah does 80% more trade with Canada and Mexico “than we do with even China, as big and important as China is.” Officials have noted, for example, that Utah exported $684 million worth of goods in 2017 to Mexico. Hansen worries the U.S. tariffs could trigger retaliatory tariffs by Mexico against U.S.- and Utah-made goods.
Hansen worries the tariffs also could torpedo efforts to ratify a new trade agreement among the United States, Mexico and Canada — which he sees as essential to hundreds of thousands of jobs here that depend on such trade.
Gibson said he realizes Trump is dealing with tough immigration issues. But he hopes that ways to allow more legal immigration or guest workers can be found, saying Utah farmers are finding it difficult to hire enough workers. “Right now I need 10 more people than I have,” he said.
(Trent Nelson | Tribune file photo) Ron Gibson is a sixth generation dairy farmer and president of the Utah Farm Bureau. Gibson was photographed at his Ogden farm, Green Acres Dairy, Aug. 1, 2018.
Research by The Times shows that tariffs could cause significant pain for U.S. consumers and businesses even in states far from the southern border.
Michigan is the state that is most dependent on imports from Mexico, largely because the automobile industry there has set up complex supply chains that send components and finished products back and forth across the border.
Michigan imported $56 billion of products from Mexico last year, second only to the $107 billion imported by Texas, which thrives on trade in energy, food and manufactured goods with Mexico.
The few other states more dependent than Utah on Mexican imports in 2017 included Rhode Island, Kentucky, Arizona and Tennessee.
