2016 Archives

It'll be 'Brexit times 100,' disaster for Texas, if Trump makes good on trade promises

SMU experts look at the ramifications of promises to upend U.S. trade policies

Excerpt

The following is from the Nov. 10, 2016, edition of The Dallas Morning News. Expertise for this story was provided by James Hollifield, director of SMU’s Tower Center for Political Studies, economics Prof. Mike Davis of SMU's Cox School of Business, and Luisa del Rosal, executive director of the Mission Foods Texas-Mexico Center at SMU.

November 10, 2016

By Jill Cowan
Economy Reporter 

President-elect Donald Trump has, throughout his campaign, vowed to essentially upend the United States’ global trade policies, breaking with Republican party orthodoxy and appealing to a base of frustrated workers who have watched manufacturing jobs evaporate.

Trump has said he’ll tear up the landmark North American Free Trade Agreement, definitively squash the long-negotiated Trans-Pacific Partnership and go after China by labeling it a currency manipulator.

In Texas — a top exporting state whose economy leans heavily on the ability to sell products abroad — experts say that if those things come to pass, the consequences could be nothing short of cataclysmic.

“This is not something where you can just hit a button and you go back to producing things in these self-contained national units or economies,” said Jim Hollifield, director of SMU’s Tower Center and a global fellow of the Wilson Center, a nonpartisan policy institute. “Look at what’s happening with Brexit ... We’re talking about Brexit times 100.”

Hollifield said the logic behind pulling out of free trade agreements ignores the realities of an increasingly globalized economy. Today, Texas’ economy gets a $248.2 billion annual boost in the form of its exports. . . . 

In the shorter term, experts said businesses will likely wait out the post-election chaos before making new investments, including ones that would create jobs.

“Unfortunately, what you do if you’re a business is you find a bunker and you crawl into it,” said Mike Davis, who teaches economics at SMU’s Cox School of Business. “This is not the time to be making bold new investments.”

He said that could lead to economic slowing in Texas, which -- particularly in the Dallas-Fort Worth area -- has become a major international trade center.

“It’s more than just importing and exporting -- we have people investing in Texas,” he said. “I don’t think people realize how much of a hub we really are.” . . . 

Luisa del Rosal, executive director of the newly formed Mission Foods Texas-Mexico Center at SMU, said Mexico’s business community has been preparing for a Trump presidency.

She said she’s confident that where Trump has used aggressive rhetoric that’s short on specifics, business communities in Texas and Mexico will step up with facts.

“The politicians are missing the big picture,” she said. “Mexican businessmen, the Texas business elite -- they’re the only ones who can influence our trade policy makers.”

She said that getting rid of it would be disastrous for the Mexican economy in particular. And when the Mexican economy sours, she said, it’ll send a wave of workers north.