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Monday, 09 March 2020 17:29

Experts Say COVID-19 Could Hurt Texas Trade and Border Economy

Written by Julián Aguilar, The Texas Tribune

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Economists monitoring the potential effects of the coronavirus on Texas’ international trade are adopting the tone of health officials: Be prepared, be prudent, but don't panic. But they believe it’s only a matter of time before a major disruption in the global supply chain impacts the state’s economy.

Texas, which has the world's 10th-largest economy, should brace for a hit, said state Rep. Rafael Anchia, D-Dallas, chairman of the Texas House Committee on International Relations and Economic Development.
 
“About 1 million jobs in the Texas economy are dependent on international trade," Anchia said. "It is impossible to contemplate that there could be no impacts and further, more dramatic impacts.”
 
Jon Barela, CEO of the Borderplex Alliance, a nonprofit focused on promoting business and economic development in Ciudad Juárez, El Paso and New Mexico, said some of the group's members “are extremely concerned about the supply chain.” 
 
Those members include international companies that own and operate maquiladoras, or factories, in Mexico. The factories assemble parts or whole products, including many that move over the border several times before final production is completed.
 
Mexico has only confirmed five cases of the deadly virus that’s claimed more than 3,000 lives across the world. But one of the country’s main suppliers of equipment is China, which has partially shut down international shipments after the virus originated in and quickly spread throughout the country.
 
Mexican companies began preparing for a slowdown weeks ago when the virus was still confined to China. 
 
Plants in the Mexican state of Chihuahua began making adjustments to their operations as early as Feb. 8 because of the quarantine in China, according to El Financiero. And more than 600 workers in Ciudad Juárez have been sent home temporarily from factory jobs, the Border Report noted.
 
“People are learning a whole lot more about trade between the trade war with China and now this,” said Ken Roberts, president of WorldCity Inc., a Florida-based company that analyzes trade data and business trends. 
 
“What they’re starting to learn is it’s not the finished product that comes from China, but it’s all the pieces of that manufactured goods that come through China,” he said.
 
Last year, Mexico was the U.S.'s largest trading partner, with more than $614 billion in two-way trade passing between the two countries. 
 
The large majority passed through Texas; the ports of Laredo and El Paso saw $227.4 billion and $76.8 billion of that commerce, respectively, making those customs districts the country’s busiest. The ports of Pharr, Eagle Pass, Brownsville and Houston were also in the top 10.
 
Roberts said Texas' oil and gas industry is also vulnerable to the effects of a pandemic: The price of oil could continue to fall due to lower demand from China, a major purchaser of Texas petroleum.
 
“As all those people (in China) are out of work, it lessens the demand for oil that’s going to come from Texas,” he said. 

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