Proposed 20 percent tax could have huge impact on AZ economy

TUCSON, AZ (Tucson News Now/AP) - Major developments in the growing rift between President Trump and Mexico President Enrique Pena Nieto on Thursday, Jan. 26.

Just hours after Pena Nieto called off a visit to Washington, a White House spokesman said a 20 percent tax on imports from Mexico could pay for a border wall.

It's a sign of the tensions between Mexico and the U.S., one day after President Trump signed an executive order to start construction of the wall.

The budding tensions between the two presidents and the 20 percent tax would have huge consequences for Arizona.

The 20 percent tax idea is like a bombshell in the state, because Mexico is Arizona's largest trading partner.

In 2015 alone, $30 billion in imports and exports passed through Arizona's ports.

Roughly 100,000 Arizona jobs are supported by trade with Mexico.

The latest figures show Mexican tourists spend $7.8 million in Arizona every day.

The Trump Administration's issues with Mexico are concerning to economists and business groups in Tucson.

"We [Arizona] export $9.6 billion worth of goods every year to Mexico. We import $7.2 [billion]. So a 20 percent tax on that--you can do the math. That's a lot of money going to the government instead of getting used in our economy here in southern Arizona and throughout Arizona," said Tucson Metro Chamber Vice President of Government Affairs Robert Medler. "Those numbers are for the entire state, but I think obviously it has a large impact here in southern Arizona."

George Hammond, director of the University of Arizona Eller College Economic and Business Research Center, agrees with this argument.

"That's [the tax] going to have some adverse impacts. It may not only reduce our imports, but it may and will likely reduce our exports," he said.

To see the University of Arizona Eller Arizona-Mexico Economic Indicators data, click HERE.

In Santa Cruz County, there are more than 100 produce warehouses, many of which distribute thousands of pallets of the United State's fruits and vegetables every day.

"We're responsible for feeding a lot of the United States and Canada, especially during this time of year," said President of the Fresh Produce Association of the Americas Lance Juyngmeyer.

He said about 17 percent of all fruits and vegetables that come through the U.S. from foreign countries come through Nogales.

Chris Ciruli is in charge of shipping operations for his family owned produce company Circuli Bros. in Nogales.

He said if Trump were to slap a 20 percent tax on Mexican imports, fruits and vegetables would cost consumers more money at the grocery store.

"It unfortunately affects the actual consumer," Ciruli said. "In the U.S., we have the lowest cost for fruits and vegetables anywhere in the world, and we want to continue that going for people."

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