article

FILE-In this photo illustration, a person holds a wallet filled with $20 dollar bills. (Photo Illustration by Thomas Trutschel/Photothek via Getty Images)

DALLAS – A report from the Federal Reserve Bank of Dallas reveals the initial effects of tariffs on Texas’ economy during the first year of their implementation. 

The state’s economy appears to generally have cooled in the fall after heating up over the summer, the report says. 

Tariff impacts on Texas economy

The most notable impact of the tariffs imposed on much of the world by the Trump administration has been rising prices. 

Of the 279 Texas businesses surveyed for the study, nearly half reported that input prices had risen as a direct cause of the tariffs, and more than a quarter of respondents said they also increased selling prices as a result. 

The report says firms with increased selling costs were those negatively affected by tariffs. Those unaffected by tariffs saw an inverse effect. 

What they’re saying:

“Input prices continue to increase as duties and tariffs take effect and remain in place,” a respondent in textiles said. “We are unsure of demand and will also need to increase our prices due to rising costs.”

Policy worries and other risks

Dig deeper:

In addition to tariffs, policy uncertainty, declining immigration and other risks weigh on the economic outlook for Texas.

Oil prices have dropped below $65 per barrel, which the report notes is the generally accepted minimum price to indicate profitability for drilling new wells.The historic 43-day federal government shutdown disrupted economic activity as well. 96,000 Texas federal employees were furloughed, $307 million in SBA loans and $675 million in infrastructure funding were delayed, and temporary suspension of SNAP benefits for 3.5 million Texans further strained households.The decline of immigration is noted alongside a stark increase in immigration enforcement. These could further impact the economy going forward.

One contact surveyed for the report noted: “Overall uncertainty about the strength of the economy is our largest concern.”

Possible ‘Big Beautiful Bill’ boost

What’s next:

The One Big Beautiful Bill Act, the Trump administration spending plan passed earlier this year, could positively impact Texas businesses going forward. 

A third of the firms surveyed for the report said they expect a boost from the law’s tax provisions, and many said they anticipate or are already implementing increased capital expenditures consistent with the act’s capital investment incentives, the report says. 

The Source: Information in this article comes from the Federal Reserve Bank of Dallas.

EconomyTexasTariffs