New Mexico border region braces for tariffs

LAS CRUCES — President Donald Trump confirmed Monday that 25% tariffs on products imported from Canada and Mexico would commence on Tuesday — a move that could have significant economic consequences nationwide, particularly in states like New Mexico, where cross-border trade plays a crucial role in the local economy.

The tariffs, set by a Feb. 1 executive order, were delayed for one month on Feb. 3 after Mexico and Canada — the U.S.’ leading trading partners — made pledges to assist in efforts to counter unauthorized immigration and drug trafficking through their borders.

On Monday, the president said the import duties would go into effect Tuesday all the same, dashing hopes of averting a trade war in which Mexico and Canada have promised retaliatory tariffs on American goods. The order includes a 10% tariff on imports of Canadian oil.

Tariffs are a duty, or tax, paid by importers, with economists and trade experts warning they will result in consumers paying more for imported products — everything from produce and alcoholic beverages to computers, automobiles and other goods. The White House has argued that inflationary effects of the tariffs would be minor.

Economist Jim Peach, a retired professor at New Mexico State University, minced no words on Monday, calling the tariff policy “economic insanity,” saying it would slow traffic through El Paso, Texas and New Mexico ports of entry and work against long-term economic development efforts in the border region.

“There is almost nothing that would be positive out of this,” Peach said in an interview. “It’s not good for the consumer. It’s not good for business. It will dampen business activity, assuming Mexico and Canada (retaliate).”

Without knowing how long the tariffs will remain in place or what other moves Washington may make during a trade war, Peach said businesses would be left guessing about whether to stockpile necessary supply chain items, cut production or staff, or invest in new domestic manufacturing only for tariffs to end.

“Business does not like uncertainty, and that’s what he’s creating here,” Peach said, referring to the president.

“The uncertainty is killing projects or postponing them,” Jerry Pacheco, president and CEO of the Border Industrial Association, told the Journal. “It’s not allowing companies to expand. … People are not being hired because companies don’t know, if tariffs are being imposed, what it will do to their markets.”

Additionally, he said the threatened tariffs had already led to a run on materials such as steel, with increased prices and scarce supplies available for industrial manufacturers in Santa Teresa.

From 2023 to 2024, New Mexico exports to the rest of the world increased by 140% to $12 billion, according to BIA data, while trade with Mexico increased 101% in one year.

That momentum, and New Mexico’s progress as a major exporter among states, stood to be lost in a trade war, he argued.

“The border down here is finally fulfilling its role in helping to diversify New Mexico’s economy. We’re creating thousands of jobs,” he said. “These tariffs have the ability to put the brakes on further export growth, and to put the brakes on paying jobs and attracting investment for New Mexico.”

The tariffs will take effect at 12:01 a.m. Eastern time.