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Filemon Vela

Representing the 34 District of Texas

Hispanic leaders wary of Trump's trade plans

January 23, 2017
In The News

Hispanic leaders wary of Trump's trade plans

BY RAFAEL BERNAL AND MIKE LILLIS

As President Trump moves to enact his campaign proposals on international trade, Hispanic leaders are worried Latino workers could be the first to feel the effects.

Many of those workers live in states and are employed by industries dependent on exports, and leaders say upending those ties could be devastating.

Of the 57 million Latinos in the United States, about 25 million live in California and Texas, two states whose economies rely heavily on exports to North American Free Trade Agreement (NAFTA) partners.

n 2015, Texas exported $248 billion worth of goods and services of which $92 billion went to Mexico, and $25 billion went to Canada, according to the U.S. Census Bureau. California exported $165 billion; $27 billion to Mexico and $17 billion to Canada.

Trump's populist campaign message, though, bashed international trade pacts which he said harmed U.S. workers. And his pick to head the Commerce Department, billionaire investor Wilbur Ross, vowed last week that renegotiating NAFTA will be the administration's top priority.

"NAFTA is logically the first thing for us to deal with," Ross said in testimony before the Senate Commerce Committee. 

"I am not anti-trade, I am pro trade," he emphasized. "But I'm pro sensible trade –– not trade that is to the disadvantage of the American worker and to the American manufacturing community."

Such comments have stirred concerns on both sides of the border that Trump could spark a trade war with Mexico.

Enacted by then-President Clinton in 1994, NAFTA sought to ease trade between the U.S., Mexico and Canada by removing most tariffs between the three. But it also encouraged U.S. companies to invest in Mexico, where labor and production costs are cheaper.

Manufacturing investments in Mexico and Canada created a continent-wide supply chain, where manufacturers' finished products often rely on inputs from factories in all three countries.

According to the Mexican federal government, about 40 percent of the value of finished products exported by Mexico is actually American parts or input.

Last month, Trump threatened a steep penalty in the form of a 35 percent tariff on manufacturers who move production across the border for finished goods intended for sale in the U.S.

"The U.S. is going to substantialy [sic] reduce taxes and regulations on businesses, but any business that leaves our country for another country, fires its employees, builds a new factory or plant in the other country, and then thinks it will sell its products back into the U.S. without retribution or consequences, is WRONG!" he wrote on Twitter. 

Friday, in his inaugural address to the nation, Trump amplified his protectionist position, vowing that “every decision” on trade will be made with the primary purpose of enhancing U.S. jobs.   

“We must protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs,” he said. “Protection will lead to great prosperity and strength.”

Those remarks have Hispanic leaders publicly urging caution.

Los Angeles Mayor Eric Garcetti said a balance had to be struck between free trade and protecting American jobs.

"One out of nine jobs in L.A. depend on trade, but we also feel both sides of the trade point. While the port of L.A. brings in about 43 percent of the goods that come to America, we also lose manufacturing jobs that may go overseas," said Garcetti.

"People think about that only happening in the Rust Belt — we are the Rust Belt in Los Angeles."

He warned that a trade war would cost more U.S. jobs than it would protect, and that any change in trade policy should take into account the unique and close U.S. relationship with Mexico.

"I would be very concerned with a downturn in trade," Garcetti said. 

"Our relationship with Mexico is much more complicated. There is aerospace happening in Mexico where parts are coming from Mexico and they’re in the U.S. for our planes. And vice versa, we’re doing things like manufacturing food in Los Angeles, at Panda Express for example, that opened up 100-plus restaurants in Mexico," he said.

The issue is also very much on the radar of House members who represent districts along the U.S.-Mexico border.

On Monday, a group of bipartisan lawmakers will host a Capitol Hill forum designed to highlight the importance of maintaining strong trade relations with Mexico.

Spearheaded by Rep. Filemon Vela (D-Texas), the panel will feature local business interests and a dozen lawmakers –– including two Republicans –– representing districts spanning from Texas to California.

Rep. Michelle Lujan Grisham (D-N.M.), said New Mexico's economy, while among the weakest in the country, would be devastated by a downturn in trade.

"That would be the downfall for us not to have a really positive trade relationship, and we can do that, I think, without being harmful to American workers," she said.

New Mexico, which is 48 percent Hispanic, shares nearly 180 miles of border with Mexico. But it does not have large ports of entry, partly due to its inhospitable terrain, so it maintains close ties with nearby El Paso.  

"The one thing that we're doing really well in New Mexico is individual entrepreneurism and then moving that effort and strategies toward exports," said Lujan Grisham.

But she worried that Trump's policies could upend those gains if they threatened trade with Mexico.

"How do I grow my economy if we don't want to do that anymore?," she asked.