Texas Republican U.S. Sen. Ted Cruz said in Waco Tuesday he supports President Donald Trump's stance on trade with China, calling the country a bad actor that the Obama administration coddled and which continues to deal in bad faith with worldwide trading partners, including the United States.
But Cruz said he told Trump imposing a 25% tariff on goods from Mexico would prove devastating to Texas, that it would amount to a dangerous game of chicken in the debate over immigration and Mexico's response to asylum seekers moving toward the United States' southern border. Cruz said one side might blink, but if not, "there would be a wreck on a rural road, and two people would be dead."
During a gathering at the Texas Farm Bureau's corporate office in Waco on Tuesday, Cruz encouraged congressional passage of the United States-Mexico-Canada Agreement, which has been signed but not ratified. He believes it would face certain approval in the U.S. Senate but worries House Majority Leader Nancy Pelosi would have second-thoughts about introducing it in the House, "not wanting to deliver a victory to Trump a year out from the election."
He urged Texas Democrats to stand strong and force the issue, saying millions of jobs statewide and nationally are tied to trade with Mexico and Canada.
The Waco-based Texas Farm Bureau has endorsed the USMCA, and spokesman Gene Hall said Tuesday it anticipates congressional approval.
"We are very much for it and consider it an upgrade to NAFTA," Hall said, referring to the North American Free Trade Agreement that became law in 1994 with the signature of President Bill Clinton.
Trump has harshly criticized the agreement with Mexico and Canada, saying it did not well serve U.S. interests.
The Texas Farm Bureau is less enthusiastic about trading blows with China.
"We're nervous about that," Hall said in an interview. "We agree that China has been a bad actor, but Texas farmers do not need a trade war. We're hoping this situation will get wrapped up as quickly as possible."
In an editorial for the Texas Farm Bureau, Hall wrote "China has purchased a lot of our farm products — more than $21 billion in 2016. That number declined, with tariff pressure, to about $9 billion last year. As the trade war deepens, the Chinese say, at least, their buying will go to zero.
"Texas is the top-producing cotton state, and China was a big part of the market. Cotton is very export dependent since there are few textile mills remaining in the U.S. Soybeans, grains and dairy products are also hard hit. Relief payments from the Trump administration have been helpful, perhaps even allowing some farmers to plant another year. But it's hard to find a farmer who wants to do it that way."
He said signing a free and fair trade agreements soon "is the answer."
A graphic accompanying the editorial, courtesy of the American Farm Bureau Federation, shows a $1.3 billion decline in agricultural exports to China during the first six months of this year compared to the same period last year.
Cruz said Tuesday the short-term pain associated with calling China's bluff, and its hand, would prove worthwhile if China caves to the pressure and opens its markets even wider to products from the United States.
Asked about companies abandoning China to escape the tariffs, possibly relocating their manufacturing facilities to Vietnam, Cruz said he has heard rumblings companies could seek refuge in Mexico.
"Obviously that would be good for Texas," he said.
Relocation from China to Mexico would reduce transportation costs for companies serving the United States, Cruz said in an interview. It would also remove companies from the influence of a Chinese government that, at least implicitly, encourages theft of intellectual property and trade secrets.
Jessica Attas, vice president for public policy at the Greater Waco Chamber of Commerce, said she agrees with Cruz to a point.
"We have been very active in supporting and pushing ratification of USMCA," Attas said. "Trade is essential to Texas, and Mexico is our biggest trade partner. When NAFTA was being written, people were still listening to '80s music on their cassette players. It's time for reforms and updates. Free and fair trade is essential to the growth of our state and local economy."
But tariff talk has roiled the financial markets, creating uncertainty and volatility counterproductive to economic growth, she said.
"Tariffs are not the way to make good policy," Attas said.
Cruz had this to say about other issues raised Tuesday:
- He and outspoken Congresswoman Alexandria Ocasio-Cortez, a Democrat from New York, agree on little but share a disdain for career politicians. Cruz said their respective staffs have met to discuss term-limit legislation.
- Cruz said Texas' enviable business climate attracts 1,000 new arrivals daily, many from California. He said some unfortunately believe the liberal policies that made their home states unlivable would work in Texas. "I think we need a western border. If not that, an entrance exam that asks, 'Do you know taxes and regulations destroy jobs?'" Cruz said to applause.
- Cruz said Hillary Clinton was the last true free-trade Democrat. "She was so demagoged on this issue by Bernie Sanders that other Democrats want no part of it," he said.