Rural Colorado at risk in a trade war between Trump and Mexico

Feb 1, 2017

Credit 50states.com

Rural Colorado is most at risk in Trump trade war with Mexico.

As The Denver Post reports, if the Trump Administration imposes a 20 percent levy on Mexican imports to help pay for a border wall, a move that could cause Mexico to retaliate, it would put Colorado’s ranchers, manufacturers and natural gas producers at risk.

“Colorado firms rely on North American supply chains, and this import tariff will ultimately be passed on to the American consumer. Worse, it could lead to Mexico enacting retaliatory tariffs on U.S. goods going into Mexico,” said Karen Gerwitz, president of the World Trade Center Denver.

Mexico is Colorado’s largest trading partner after Canada, but Canada’s share of Colorado exports fell from 24.5 percent in 2012 to 17.7 percent in 2015, while Mexico’s share of Colorado’s exports, rose from 10.4 percent to 13.5 percent over that same time period. 

Beef exports to Mexico are especially important to Colorado meat producers, accounting for about $103 million sales through November of last year. And Colorado pork sales in Mexico reached $33.3 million in the first 11 months of 2016, up from $1.97 million during that same period in 2015. Chicken exports have also risen, from $3.6 million to $11.9 million.

Cheese and aluminum can lids also top the list of Colorado exports to Mexico.

U.S. natural gas producers could also be impacted by a trade war with Mexico, which has made a big investment to replace fuel oil and liquefied natural gas with cheaper natural gas from the U.S., Jason Slingsby, an energy analyst at BTU Analytics, told The Denver Post.

U.S. natural gas exports via pipelines doubled between 2009 and 2016, due to new demand from Mexico, according to the U.S. Energy Information Administration.

Producers have invested billions of dollars into fields in west Texas under the assumption they could off-load any associated gas they produced into Mexico, which in turn gets an economic boost from having a cheaper source of energy.

Gas prices will be further depressed in Colorado if it can’t flow freely into Mexico, which would harm producers and rural economies where they operate, Slingsby said.

“Trump is very pro oil and gas,” he said.