Borderlands Mexico: Mexico may face more Trump tariffs over Texas water dispute

Yahoo

13-04-2025

Borderlands Mexico is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: Mexico may face more Trump tariffs over Texas water dispute; $88M logistics center planned for Laredo, Texas; Unilever announces $800M factory in Monterrey, Mexico; Automotive supplier plans $4M expansion in Mexico.
President Donald Trump has threatened Mexico with more tariffs over a long-running water dispute at the Southern border.
'Mexico OWES Texas 1.3 million acre-feet of water under the 1944 Water Treaty, but Mexico is unfortunately violating their Treaty obligation,' Trump said Thursday in a social media post, referring to a water-sharing agreement between the two countries. 'This is very unfair, and it is hurting South Texas Farmers very badly.'
Trump warned that the U.S. would keep escalating actions against Mexico, including potential tariffs, until it honors the treaty.Mexican President Claudia Sheinbaum said on Thursday she has already sent a proposal to Trump's team.
'It's been three years of drought, and to the extent water is available, Mexico has been complying. The International Boundary and Water Commission (IBWC) has continued its work to identify solutions favorable to both countries,' Sheinbaum said in her daily news conference, according to El Universal. 'I'm sure that, as with other issues, an agreement will be reached.'
Farmers in South Texas have been seeing declines in irrigation water, an ongoing issue caused by droughts and disputes with Mexico over the treaty, experts said.
Dante Galeazzi, president and CEO of the Texas International Produce Association, said the crisis is so severe that it's affecting the crops that grow in the Rio Grande Valley.'Growers in the valley, they're not able to plant what they want to, and they're not able to plant when they want to,' Galeazzi told FreightWaves in an interview. 'They've got to change their crop mix, because you think about valuable commodities like celery, which requires five to six waterings on a very specific schedule. If you don't have the water, you can't plant celery. That's the same issue across a lot of different commodities: broccoli, cauliflower, brussels sprouts, your high-dollar fruits and vegetables require consistent water.'
The Rio Grande Valley is the epicenter of the Texas fresh produce industry. The area stretches across the southeastern tip of Texas along the U.S.-Mexico border. The region includes cities such as Donna, Edinburg, McAllen, Mission and Pharr.
More than 35 types of fruits and vegetables are grown in the Rio Grande Valley, including grapefruit, oranges, avocados, cabbage, aloe vera, onions, cotton, sugarcane and watermelons.
The produce industry in the valley includes cold storage warehouses, wholesalers, distributors, customs brokers and transportation companies.
If more farmers in Texas are forced to grow the same crops due to lack of water, there's an oversupply of product, Galeazzi said.
'When you have a ton of the same thing – less water-intensive crops …, things like onions and cabbage – you oversupply and you depress the market so you don't get the returns you were expecting. Now you aren't just in a water shortage, you're in an economic problem on top of that,' Galeazzi said.
The water Mexico owes the U.S. under the treaty significantly impacts farmers and ranchers in the Rio Grande Valley, according to the Texas Commission on Environmental Quality.
The 1944 Water Treaty obligates both countries to share water resources from the Colorado and Rio Grande rivers. Under the treaty, Mexico is obligated to transfer to the U.S. on average 350,000 acre-feet of water per year over a five-year cycle.The disputed water resides in the Amistad and Falcon reservoirs, international reservoirs located along the U.S.-Mexico border in the Rio Grande Valley. The reservoirs are managed jointly by the U.S. and Mexico.
Galeazzi said he has been urging elected state and federal officials to call on Mexico to release water it owes Texas under the treaty.
'The sad truth is that in the last 30 years of the [1944 Water Treaty] … Mexico has only complied one time, and that was because a massive rain storm came and their infrastructure could not support any more water,' Galeazzi said. 'So that year they just gave us the excess water, and it happened to be enough to satisfy their requirements that cycle.'
Maria-Elena Giner, the U.S. commissioner for the IBWC, said the agency has been working with its Mexican counterparts on the issue of delivering more water to Texas.
The IBWC is a binational entity responsible for applying the boundary and water treaties between the U.S. and Mexico and settling differences that arise in their application. Its U.S. section is headquartered in El Paso, Texas.
'The U.S. Section of the IBWC (USIBWC) has continually made clear to Mexico they need to commit to more reliable and predictable deliveries of Rio Grande water. We are working with the Government of Mexico as well as the U.S. State Department on this matter,' Giner said in an email to FreightWaves.
'In addition, Mexico agreed to releases of San Juan River water in the Rio Grande to help ease the shortage, although it falls far short of what is needed. We will continue to advocate for U.S. users while seeking solutions that benefit both countries, such as ways to conserve water.'
Giner said droughts are also causing water shortages in the region.
'Water shortages in South Texas and parts of northern Mexico have been attributed to drought coupled with the growth in population along the U.S.-Mexico border,' Giner said.
Logistics giant DSV is planning a 905,000-square-foot, $88 million distribution center in Laredo, Texas, according to documents filed with the city.
The property will be on 49 acres in Port Grande, a 1,990-acre master-planned industrial park near the U.S.-Mexico border, along Interstate 35.
Construction will begin this month and is scheduled to finish by mid-2026.
Denmark-based DSV was founded in 1976. The company offers air, ocean and road freight solutions, along with contract logistic services in over 80 countries.
The company has more than 2 million square feet of warehouse space in Texas, including two facilities in Lancaster and one in Pharr.
London-based Unilever plans to build a factory near Monterrey, Mexico, where the company will produce deodorants, shampoos and other beauty products primarily for markets in the U.S. and Canada, according to El Economista.
The factory represents an investment of $800 million and will create more than 850 direct jobs. The company did not provide a timeline for the facility's completion.
Unilever is a British multinational consumer packaged goods manufacturer. The company has over 300 factories in 69 countries.
PMP Group is expanding its operations in Monterrey, Mexico, including the construction of a new warehouse, showroom and service area.
The $4 million expansion is focused on supplying parts for the automotive industry, CEO Porfirio González Mier, told El Financiero.
In addition to auto parts, Monterrey-based PMP Group manufactures industrial cranes, fans and other heavy machinery. Its clients include Caterpillar, Hyundai and Kia, as well as metal producers Metalsa and Deacero.
PMP Group exports its products to the U.S., as well as countries across South America.
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