Tariffs, Value Chains & Competitiveness: Insights from the Federal Reserve’s Jesús Cañas

During an economic conversation held as part of the event hosted by the McAllen EDC on November 13, Jesús Cañas, Senior Business Economist at Federal Reserve Bank of Dallas, offered a clear and nuanced look at how tariffs, USMCA dynamics, and regional production models are shaping competitiveness along the Texas–Mexico border. His insights grounded the current landscape while pointing toward the opportunities emerging ahead.

A tariff environment that applies pressure… without breaking the system

Cañas highlighted that tariff-related price impacts have been “less than anticipated.” Many companies continue holding off on passing additional costs to consumers, waiting for greater regulatory certainty. He added that some price adjustments may unfold later in the year and into early next year — a sign of a market that adapts deliberately, not abruptly. It reflects an industry that manages margins strategically and responds to global signals with measured discipline.

USMCA: a competitive anchor in a shifting global landscape

Companies operating under USMCA rules avoid many tariff increases seen elsewhere, giving the Texas–Mexico region a natural competitive edge.

“There is an incentive to trade via the region and the USMCA treaty — and that has been beneficial for Mexico and the Texas–Mexico border.”

This advantage strengthens the region as a preferred destination for manufacturing, nearshoring, and supply chain realignment across North America.

Reynosa: Cañas highlights key manufacturing hubs:

Reynosa demonstrates stability. Business patterns suggest less wage sensitivity and higher value-added processes — a combination that has driven nearly a decade of steady growth.

Despite not having the exact dataset on hand, the trends and evidence presented indicate that Reynosa is rising from “emerging” toward “standout” status within North American manufacturing.

A region that continues to adapt, improve, and compete

When asked about overall performance in the Valley and Reynosa, Cañas highlighted continued competitiveness:

“It looks like they are still competitive… showing growth.”

That growth is supported by strong supplier networks, skilled labor, modern processes, and a binational ecosystem that collaborates across borders. Even amid global volatility, the region is positioning itself as a reliable, opportunity-rich corridor for manufacturers.

Conclusion

The McAllen EDC event underscored a powerful message: the Texas–Mexico border is not just holding its ground — it is advancing. Tariffs are reinforcing the value of operating within the USMCA region. Reynosa continues to grow as a high-value industrial hub. And the binational corridor remains resilient, dynamic, and strategically aligned with North America’s future. Where industry moves with confidence, opportunity expands, the border continues to rise.