Effects of Mexican Tarrifs on Texas Agriculture

Effect of Mexican Tariffs on Texas agriculture

On March 11, 2010 President Obama signed a $410 billion spending bill that eliminated funding for the U.S.-Mexico Cross-Border Trucking Demonstration Project. The project was implemented under President George W. Bush and allowed firms from both the United States and Mexico to transport goods across the border without restrictions. In retaliation to the elimination of the project, Mexico has extended its tariffs to over 50 agricultural products which have affected about $1.7 billion in annual trade.

The trucking agreement was set to be implemented under NAFTA in 1993 and was supposed to create new businesses while lowering consumer prices. The program was shot down by the Clinton administration and it wasn’t until President George W. Bush was elected that the pilot project was put into motion. Before the program started, Mexican truck drivers were only allowed to enter the U.S. 25 miles north of the border, where they passed their loads on to American rigs. President Bush’s program “had allowed 100 prescreened Mexican companies to allow their truckers to drive beyond a 25 mile commercial zone in the United States” (Branson 1). The cut of the program resulted in a NAFTA violation. Under NAFTA, North American countries are allowed to exchange goods freely between borders. When a particular country violates the agreement, other counties may file a petition to correct the violation. This is exactly what happened with the elimination of the pilot project. Mexico filed a petition and because the United States was not upholding its end of the NAFTA agreement, Mexico was allowed to retaliate with “a list of tariffs to 54 American agriculture products worth an estimated $1.7 billion” (Hill 1).

Though this is a national policy, it has a significant effect on Texas agricultural products such as onions, shelled nuts, juices, and cheeses. The proximity of Texas and Mexico allows more goods to be shipped across borders at a...