Texas manufacturing drops amid tariff concerns
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Texas manufacturing activity fell this month as business executives report increasing uncertainty about President Trump's looming tariff policy 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 Tuesday, along with those already imposed on China.
- Automakers are delaying new vehicle launches because of 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: Toyota's San Antonio plant produces the Tundra and Sequoia, both of which rely on Mexican imports, according to the Express-News. It employs more than 9,300 people, including on-site suppliers, and added 400 jobs as part of a $531 million expansion announced in June.
- Sen. José Menéndez, a San Antonio Democrat, said at a news conference this month that he expects vehicle prices in general to rise by $3,000 on average if tariffs are enacted.
- Snopes debunked rumors that Toyota planned to shut down U.S. plants in response to the tariffs.
What they did: The Dallas Fed surveys manufacturers statewide every month about orders, employment and prices. The latest report includes responses from 89 of the 118 manufacturing firms surveyed Feb. 11-19.
By the numbers: It also asked questions about tariffs and immigration, to which 327 business executives in manufacturing, retail and service industries responded.
- 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.
The bottom line: Manufacturers aren't the only ones worried. Consumer sentiment also declined in February compared to January, according to new survey data.