Trump’s tariff chaos has already cut into Texas business’ growth, outlook, new report shows

Before President Trump sent markets into free fall when he unveiled a laundry list of new tariffs, concerns over his trade policies had already damaged sales growth and outlooks for Texas business, a new report from the Federal Reserve Bank of Dallas shows.

Released Thursday, the Dallas Fed’s latest analysis found that half of Lone Star State businesses worry Trump’s economic policies could teeter the economy into recession.

“Higher tariffs, which raise costs and damp demand, were cited by respondents,” the report states. “As the nation’s leading trading state, Texas is highly exposed to tariffs. Declining net immigration will also slow growth, providing particular challenges for some industries.”

The Fed’s uncertainty index was highest for manufacturers and service sector companies, whose March reports rose to levels not recorded since late 2022 — the height of the COVID-19 pandemic.

To be sure, growth for Texas’ service-sector businesses has been on the skids since late 2024 and hit zero in March, according to the report. Meanwhile, growth has dropped at a similar pace for the state’s manufacturers, even though they saw a slight production increase last month.

Texas is the nation’s top state for international trade, accounting for $850 billion in commerce in 2024, or 16% of the U.S. total, according to federal numbers. Indeed, 38% of Texas businesses told the Dallas Fed in February that they’d already experienced negative impacts from the White House’s tariffs and trade policies.

“Even before imposition of tariffs, business contacts noted they felt the effects of business condition uncertainty,” the report adds.

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This article appears in Apr 2-15, 2025.