Economists hope federal infrastructure bill will strengthen Texas’ trade relationship with Mexico
The state’s trade relationship with its southern neighbor remains strong despite the global pandemic. There is also hope new money for ports included in the bipartisan federal infrastructure bill will add to that growth.
Mexico remains one of the United States’ top two worldwide trading partners despite supply chain issues that have plagued manufacturers and consumers since the COVID-19 pandemic began.
With the recent signing of the federal Infrastructure Investment and Jobs Act, trade experts say Texas’ proximity to Mexico will continue to be an economic boon to the state as it is the country’s top exporter.
In 2021, more than $661 billion in two-way trade passed between the United States and Mexico, according to U.S. Census data analyzed by WorldCity. The lion’s share of that, about $243 billion, passed through the Laredo customs district. Ports in El Paso accounted for about $85 billion, with ports in Pharr, Eagle Pass and Brownsville also in the top 10. Texas' trade relationship with Mexico helps sustain about 1 million jobs, according to the Texas Economic Development and Tourism office.
The federal legislation, commonly known as the Bipartisan Infrastructure Bill, provides nearly $17 billion for improvement to ports and waterways, which includes about $2.5 billion for goals and projects outlined in Customs and Border Protection’s 2021-2026 strategic plan. The plan includes deploying technology to “defend the United States and facilitate the secure flow of international trade” which would reduce wait times at ports of entry and adopt new technologies.
There is an additional $210 million in the bill for road improvements at ports of entries, and about $430 million for feasibility studies that will determine what funding will be allocated for additional improvement projects. The General Services Administration is working with CBP to finalize a project plan, GSA press secretary Christina Wilkes said in a statement.
“In addition to rebuilding America’s roads and bridges, the Infrastructure Investment and Jobs Act will allow GSA to modernize land ports of entry across the country, improving security and sustainability while creating jobs and helping to mitigate future supply chain challenges,” she said.
"Anything that helps facilitate trade, a process that also includes local and state agencies, will improve Texas’ trade relationship with Mexico and improve the state’s economy," said Teclo Garcia, the City of Laredo’s Economic Development Director.
“Between our two commercial bridges, the World Trade Bridge and Colombia Solidarity Bridge, there were seven times in November where we saw more than 10,000 trucks go south. Those are records numbers,” Garcia said, adding that more than 5.2 million trucks crossed the port in 2021. “When it comes to infrastructure and expanding World Trade and enhancing Colombia, that’s paramount for us. We have to that.”
Whereas China had been the dominant trade partner in the past, Ken Roberts anticipates Mexico will keep the top spot. Roberts is the founder and president of WorldCity and former member of the Federal Reserve Trade & Transportation Advisory Board.
“Mexico gained by China’s loss, but Mexico (also) steamed along,” said Roberts. “And U.S.- Mexico trade has done pretty well even through the pandemic.”
Roberts said Texas trade will also benefit from suppliers reverting to just-in-time models, where items and supplies are transported for current demand rather than stockpiled for future needs.
“I think we’ll get back to where the supply chain kinks get sort of worked out and supply and demand will get into a better balance than it is currently,” he said.
Though optimistic about the infrastructure legislation, Garcia urged patience as there are several agencies involved in the movement of goods, including highway management by the Texas Department of Transportation and the City of Laredo, which operates the bridges. The legislation also has a $1 trillion price tag, so it’ll take time to figure out who gets what.
“It’s massive, it’s a lot of work and a lot of money to get out,” he said.
Roberts said it should also be noted that international trade depends on Mexico as much as the United States.
“There has to be really close cooperation with Mexico,” he said. “You spend a ton of money and build a brand-spanking new clearance set up on the U.S. side and you don’t make similar changes on the south side, it’s not going to help out as much and that will take some real coordination.”
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