Is Texas Vulnerable to International Trade Disruptions?

Trade tensions have been mounting; since 2017, the United States has withdrawn from the Trans-Pacific Partnership, while imposing tariffs on washing machines, solar panels, aluminum and steel. In the meantime, the North American Free Trade Agreement continues to be negotiated with Mexico and Canada. Such international trade disruptions could be a problem.

Moody’s investors Service’s recently released report, “FAQ: U.S. State and Local Government Exposure to Rising Trade Tension,” poses some good news for Texas, however. Analysts note that states with large trade volumes, the Lone Star State among them, “have very large and diverse economies that greatly mitigate vulnerability to changing trade terms . . .” absent any kind of economic downturn.

There is, however, no doubt that Texas (which Moody’s ranks as Aaa stable) has a high exposure to trade with both Canada and Mexico. Large changes in international trade volume could impact port-dependent areas such as Laredo, TX, which “derives most of its economic activity from trade and cross-border activity with Mexico,” the Moody’s analysts note.

For comments, questions or concerns, please contact Texas Commercial Real Estate News Editor Amy Sorter