New tariffs could impact prices, jobs locally

MCALLEN, Texas (ValleyCentral) — New tariffs are slated to take effect this Monday, July 14, and many Rio Grande Valley residents are worried about what might happen.

South Texas College Economics Professor Dr. Kevin Peek says tariffs will have two major impacts in the region and that they are "absolutely not the solution" to economic problems in the country.

He speculates that tariffs will only cause higher unemployment as trade decreases, and American products will also receive tariffs from other countries in retaliation. This would impact a region such as the Valley, where trade is significant.

For consumers, this would mean paying more at the store.

“There's going to be an increase in prices for all of us, generally, across the board, because the tariffs that are being applied on our trade partners are generalized, so they're not necessarily on one product or another, but across the board," Peek said.

Peek also worries about the tariffs being imposed on medications, as many of these pharmaceuticals are made in other countries. He worries this can impact children and senior citizens the most.

“Fifty percent of all pharmaceutical products manufactured in the United States rely on ingredients that are imported from foreign countries," Peek said. "If you apply a tariff on those ingredients, and once again, the importing manufacturer, the importing pharmaceutical company pays that tariff and then passes the cost along to consumers.”

On the other side of the border, not all businesses are worried about the impact of tariffs. One business owner says it even offers a unique opportunity for the region.

Jorge Martinez is the CEO of Micro Partes and has a corporate office in McAllen and factories in Monterrey, Nuevo Leon, where they produce everything from cable ties to cable clamps, plugs, and fasteners for the automobile and aerospace industry.

"The North American bloc as a whole has the potential to compete with the 'red dragon' — that is, China," Martinez said. "Mexico offers a workforce that, while no longer extremely cheap, is skilled, certified, and — most importantly — geographically close to the United States. This proximity not only facilitates logistics but also decision-making, as both countries share time zones."

He says his company has seen a spike in business as they prepared with new infrastructure, knowing that tariffs on Asian countries would bring more business home to them.

"We’ve seen an increase in purchase orders and more RFQs, which are essentially requests for new products and quotations," Martinez said. "We've had to adapt to set up and provide service for this new wave of regional requirements."

Back home, Dr. Peek does not believe that tariffs are the solution to regional dominance.

“Is that it undermines trade, it reduces trade, and a direct result of that is less employment and more uncertainty and higher indices of poverty in the Valley," Peek said.