Texas business executives worry about tariffs
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Texas manufacturing activity fell this month as business executives report increasing uncertainty regarding President Trump's looming tariffs and concerns about changes to immigration policy, per a new Federal Reserve Bank of Dallas report.
Why it matters: Texas stands to lose $47.1 billion — the most of any state — if tariffs on goods from Canada and Mexico take effect, along with those already imposed on China.
- Automakers are already delaying new vehicle launches due to uncertainty about manufacturing costs if tariffs are enacted.
Driving the news: Production and new orders dropped among Texas manufacturers this month compared to January, with many businesses reporting they were shortening workweeks and potentially cutting workers, per a Dallas Fed survey released Monday.
- Still, manufacturers reported they expect production to increase in the next six months or by early 2026.
Zoom in: General Motors executives said last week the company would consider moving plants if U.S. tariffs become permanent.
- The automaker employs about 5,200 people at its Arlington factory, which produces SUVs.
What they did: The Dallas Fed surveys manufacturers statewide every month about orders, employment and prices. The latest survey includes responses from 89 of the 118 manufacturing firms surveyed Feb. 11-19.
- The survey also asked questions about tariffs and immigration, to which 327 business executives in manufacturing, retail and service industries responded.
By the numbers: About 32% of Texas firms reported they've relied on hiring workers from out of state in the past year, and a quarter reported relying on hiring workers who moved from another country.
- 18% of Texas executives surveyed reported immigration policy changes would affect their ability to hire or retain employees.
What they found: Many executives also said their businesses would be negatively affected if tariffs are imposed on goods from Mexico and Canada. Some said their own cost of business would increase while others worried about demand.
- "Our customers are impacted by the uncertainty these policy changes create, and this can lead to delays in project start dates or complete cancellation of anticipated projects," one executive wrote. The Fed did not identify respondents.
The bottom line: Manufacturers aren't the only ones worried. Consumer sentiment also declined in February compared to January, according to new survey data.