The Texas economy is among the most vulnerable in the country when it comes to the threat of escalating tariffs. While much of the focus has been on trade with Mexico — due to tightly integrated supply chains — the future of European trade with Texas is also uncertain.
The European Union imports more from Texas than any other U.S. state, according to the European Commission. That trade supports approximately 280,000 jobs in Texas. The state exports roughly $100 billion in goods and services to Europe, including chemicals, aerospace products, resins and professional services.
“That’s one, of course, pretty easy to start losing that business to other people, because it’s mostly relationship based,” said Ray Perryman, Texas economist.
Perryman said above all other exports, when we look at the EU-Texas trade relationship, energy is king.
“We have a lot of oil and gas activity, a lot of petrochemicals, a lot of, more recently, liquefied natural gas,” said Perryman.
If tariffs are imposed and the EU retaliates, it could be particularly damaging for Texas. It would run counter to Texas’ economic interests.
“That doesn’t make great sense from a Texas point of view, because, you know, we export all this LNG,” said Kishore Gawande, a professor at the University of Texas at Austin
Liquefied natural gas is a growing Texas export, and it’s helped Europe decrease its reliance on Russian fuel. In the Dallas Fed’s recent survey, several energy firms cited tariffs as hurting the sector and increasing costs.