Mexico Trade Tariffs Could Harm Hoosier Businesses And Consumers

By Abrahm Hurt
TheStatehouseFile.com

INDIANAPOLIS–The leader of one of the state’s largest business organizations warns that a trade war with Mexico would be costly for Indiana consumers and industry alike.

“A 5% tariff would essentially raise taxes on Hoosiers by $226 million a year,” Kevin Brinegar, president and CEO of the Indiana Chamber of Commerce, said. “And a 25% tariff would effectively raise taxes on Hoosiers by $1.1 billion a year.”

Brinegar made his comments Monday after President Donald Trump that the United States would place a 5% tariff on all Mexican imports beginning July 1 because of Mexico’s failure to reduce the number of undocumented immigrants crossing from Central America into Mexico. The tariffs would gradually increase until they reach 25% in October if the immigration problem isn’t resolved.

Brinegar said Indiana is the nation’s 13th largest importer of Mexican goods, bringing in $4.5 billion worth of goods last year. Many Indiana businesses import component parts from Mexico that are made into finished goods in Indiana and then shipped out again, he explained. Top imports from Mexico include auto parts, gas and audio and video equipment as well as produce such as avocados and tomatoes.

Many Indiana businesses, like Carrier Corp., have set up operations in Mexico. Carrier has cut more than1,300 Hoosier jobs over the past few years as it shifted jobs south of the border. A spokesperson for Carrier’s parent, United Technologies, declined to comment on the tariffs or the impact on its business.

A trade war with Mexico would also be costly for Indiana’s farmers. Bob White, director of national government relations at Indiana Farm Bureau, said Mexico is Indiana’s second largest trade partner behind Canada. Tariffs would increase costs for consumers and Indiana farmers who import vegetables and vegetable transplants from Mexico this time of year.

“It will probably hurt our corn and soybean relationship with them, although right now, they’re still buying from us,” White said. “They were still buying from us with the 5% steel and aluminum tariff, although those have been lifted.”

White also said these tariffs could put the passage of the United States-Mexico-Canada Agreement (USMCA) in jeopardy.

“We just got rid of the steel and aluminum tariff to hopefully ensure the passage of USMCA and now 5% on Mexico,” he said. “What’s that going to do to the expectations of passage?”

The USMCA would have replaced the North American Free Trade Agreement, also known as NAFTA, as the principle trade agreement among the U.S., Mexico and Canada. USMCA includes changes for automakers, digital trade provisions, and intellectual property protections. It was signed by the three countries’ leaders in November and still needs to be ratified by each government.

Brinegar said the Indiana Chamber’s concern is that tariffs are not the right approach to trying to address an immigration issue.

“The issues with American immigration should be addressed more directly. Not indirectly through imposing tariffs that are essentially just raising taxes on the American people,” he said. “We’re punishing the American people for illegal immigration.”

As a trade war with Mexico looms, the U.S. and China continue their trade dispute. In May, the U.S. increased tariffs on Chinese goods by $200 billion, and China responded by increasing tariffs on U.S. goods by $60 billion.

Abrahm Hurt is a reporter for TheStatehouseFile.com, a news website powered by Franklin College journalists.