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What’s New This Week

Good morning, this week, Trump’s 25% tariffs on Mexico spark a fragile 90‑day truce, Texas and California gear up for a redistricting arms race, and consumers face rising prices and tough choices in a trade‑war economy. We explore what these shifts mean for border economies, manufacturing in Arizona, and the fragile trust underpinning North American trade.

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Trade Winds

Tariffs, Mexico, and a Costly 90-Day Clock

President Trump’s latest executive order sets new tariffs on 68 countries and the EU — but the most consequential for Arizona and the border region is his 25% tariff on Mexican goods. After a tense call with President Claudia Sheinbaum, the U.S. granted Mexico a 90‑day negotiating window, avoiding an immediate hike but leaving the existing 25% rate in place — and signaling that higher rates could follow if talks fail.

This is more than diplomatic drama. Tariffs are taxes on imports, and the costs almost always land on U.S. consumers and businesses. The inflation data confirms it: the government’s own index shows prices rising on goods targeted by earlier tariffs. Now, with new duties on autos, copper, aluminum, and steel — plus food products and other essentials — households and manufacturers in states like Arizona will feel the pinch fastest.

Why Arizona gets hit hardest:

• Cross-border supply chains: Arizona manufacturers — particularly in aerospace and semiconductors — rely on Mexico for precision components. A 25–50% duty squeezes margins and risks production delays.

• Produce and food imports: Nogales handles over $4 billion in fresh fruits and vegetables annually. Tariffs on Mexican produce raise grocery costs for Arizona families within weeks.

• Mining and critical minerals: Arizona’s copper sector is deeply integrated with Mexican smelters; tariffs disrupt pricing and project timelines for both sides of the border.

The bigger problem: uncertainty.
Ninety days of negotiation may sound like a reprieve, but for businesses, it’s paralysis. Executives can’t plan capital spending or pricing when tariff rates might spike — or fall — every quarter. Investors hesitate. Supply chains hedge. The result is a drag on growth that compounds even if no further hikes occur.

I’ve just returned from several weeks in Mexico where I met with cabinet officials, governors, and CEOs across energy, manufacturing, and logistics. The message was clear: uncertainty kills progress. Cross‑border infrastructure projects stall. Produce growers won’t plant aggressively. Semiconductor suppliers delay expansion. And while tariffs are framed as leverage against Mexico, American consumers and workers bear the cost — from higher food prices in Phoenix to slowed job growth in Yuma logistics hubs.

The deeper risk: trust is eroding. Mexican leaders told me they’re already courting European and Asian partners, not because they want to abandon U.S. trade, but because they no longer see America as a reliable partner. Instead of strengthening North American integration, these policies push allies to look elsewhere — weakening the very supply chains we’ve spent decades building.

What businesses and communities should do now:

• Scenario plan: Model exposure at 25%, 35%, and 50% tariffs to prepare pricing and cash flow strategies.

• Diversify sourcing: Explore suppliers within the U.S. and Canada to hedge against prolonged uncertainty.

• Engage policymakers: Arizona businesses must press lawmakers to advocate for stability in cross‑border trade policy.

My prediction: If tariffs remain or rise after the 90‑day window, we’ll see sharp increases in food prices, slower investment in Arizona’s manufacturing sector, and growing friction in U.S.–Mexico relations. This uncertainty will likely push Mexico to deepen trade with other partners — and leave U.S. businesses scrambling to regain ground they didn’t need to lose.

Power Move

A Redistricting Arms Race Heats Up

The U.S. House of Representatives has 435 seats. Right now, Republicans hold a razor‑thin majority — 220 seats to Democrats’ 215 (after special elections and resignations). Control of the House — and the ability to advance or block any part of the presidential agenda — will hinge on just a handful of seats in 2026.

That’s why Texas Republicans are taking the extraordinary step of redrawing their congressional map mid‑decade. Their proposal could flip as many as five Democratic‑held seats in South Texas and urban strongholds like Austin and Houston — districts that were competitive in 2024 and are home to large Latino populations. President Trump has pushed for this move to shore up GOP control ahead of the next midterms, ensuring a friendly Congress for the duration of his second term.

In response, California Governor Gavin Newsom and Democratic leaders are considering a counter‑move: overriding California’s independent redistricting commission to draw new maps that could net Democrats several seats of their own. New York and other blue states are exploring similar steps, setting up what some are calling an unprecedented partisan “map war.”

Why this matters:

• House Control at Stake: A five‑seat swing in Texas could secure the GOP majority; a few seats in California could erase it.

• Latino Voter Battleground: Many affected districts are majority‑Hispanic, making Latino turnout and party loyalty decisive.

• Democratic Norms Eroding: Mid‑cycle map rewrites — once rare — risk becoming standard tools in partisan warfare, weakening trust in elections.

Bottom line: The 2026 midterms may be decided less by campaign messaging and more by the battle over who gets to draw the lines — a fight with direct implications for border policy, trade negotiations, and immigration reform.

The Border Buzz

Consumer Caution in a Trade‑War World

🛒 Why Consumers Are Feeling the Heat

New tariffs affecting nearly 70 countries—including Canada, Mexico, China, and the EU—are starting to push up consumer prices across the board. Analysts at Budget Lab (Yale) estimate the result could be nearly $2,400 in added costs per household, with essentials like groceries, clothing, and home goods hit hardest.

Retail giants like P&G, Walmart, Levi’s, and Adidas are already implementing price hikes of up to 17% on products sourced from countries under tariff regimes—making basic household items suddenly costlier.

🎯 Winners and Losers in the Trade War Economy

• Losers:

  • Automakers and parts suppliers: GM and Volkswagen have disclosed combined tariffs in the billions—eating into margins or forcing price hikes. Some industry analysts expect a potential $7 billion revenue hit in 2025 alone for the Big Three U.S. automakers.

  • Low- and middle-income households: Tariffs function like regressive taxes, weighing more on households that spend more of their income on imports.

• Limited Gains:

  • Large retailers and some tech firms (e.g. Nvidia) can negotiate better supply deals or maintain margins, offering some insulation amid rising prices.

🛑 What Consumers Should Do

Based on consumer surveys and trade analyst insights:

• Save and delay discretionary spending.

• Avoid big-ticket imports (electronics, luxury clothes, furniture) until after the dust settles.

Smart tactics:

• Buy essentials before prices rise—especially household goods and non-perishables.

• Look for sales and rewards-based credit card deals.

• Switch to generic or U.S.-made alternatives, especially when price surges hit imported items hardest.

📌 Why This Matters at the Border

Tariff uncertainty extends to border‐regional consumers and companies:

• Households in border states like Arizona, New Mexico, and Texas are directly impacted—higher food and consumer goods costs from cross-border supply chains.

• Local producers and suppliers, often sourcing parts or raw materials from Mexico, face margin pressure and shifting consumer demand.

The advice is simple but powerful: Lay low now, spend strategically, and wait for clarity.

🧠 Learning from Experts

Economists and policymakers emphasize that tariffs create both price effects and policy uncertainty:

• A Yale analysis shows most tariff costs are ultimately borne by U.S. consumers, not foreign suppliers.

• Market groups note that nearly a third of monitored companies are already raising prices due to trade war pressures, even before full cost-pass-through hits consumers.

✏️ Prediction

• Consumers who pause discretionary spending now will save or avoid unnecessary losses.

• Households that shop ahead for basics—and stick with locally sourced goods where possible—will emerge less exposed to inflation.

• On the reverse side, delayed demand could deepen industry downturns, delaying recovery even if tariffs are rolled back later.

Bottom line: In today’s trade-war climate, the best consumer move is to buy smart, spend sparingly, and wait for tariff dynamics to stabilize.

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