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What Could the Mexico Trade Deal Mean for Houston Business?

Some analysts say the Trump administration’s tentative trade deal with Mexico is good for Houston’s economy. Others say it’s a mixed bag.

Mexican President shakes hands with Donald Trump
Outgoing Mexican President Enrique Peña Nieto meets with U.S. President Donald Trump.

We’re learning more about the Trump administration’s tentative trade deal with Mexico to update NAFTA. The handshake agreement is the result of weeks of negotiation between the U.S. and Mexico – without Canada – to bring NAFTA into the 21st century.

Tony Payan from Rice University tells News 88. 7 from what we know of the deal so far, it’s a mixed bag.

“All in all, is it a gain of certainty in the markets? Yes. Is it an enormous gain? I doubt it,” he said. “There’s still much, much work still pending, and, of course, Canada’s own place at the table is still to be defined.”

The deal is essentially a series of bullet points right now – with the exact language yet to be ironed out. But some highlights include changes to vehicle manufacturing tariffs.

Right now, vehicles produced in North America can be sold in the U.S. duty-free – as long as about two-thirds of their parts come from North America. But the new deal would increase that to 75 percent. And it would also require a large portion of such vehicles be produced in higher-wage factories.

President Trump had also wanted a sunset clause that ended the new agreement after five years – unless it was renewed. However, the new agreement would have a 16-year term, with an option to review and change it at the six-year mark.

So, what could this new agreement mean for businesses in Houston and Texas? In the audio above, we have some reaction and analysis from Vance Ginn, senior economist for the Austin-based conservative think tank the Texas Public Policy Foundation, and Chris Tomlinson, business columnist for the Houston Chronicle.

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