As of August 2025, San Antonio, Texas, is navigating changes brought by recent trade tariffs under the Trump administration. With tariffs on Mexican imports rising from 25% to 30% this week, alongside duties on steel, aluminum, and goods from Canada and China, businesses are adapting to new economic realities. San Antonio, a key hub for cross-border trade, manufacturing, and automotive industries, is directly affected due to its proximity to Mexico and trade relationships. This blog examines the tariff landscape, its effects on local businesses and real estate, and how the city is responding with both challenges and opportunities in focus. We'll delve deeper into specific industries, survey insights, and adaptive strategies to provide a comprehensive view.

Tariffs in the San Antonio Context

San Antonio’s economy benefits significantly from trade with Mexico, which drives about a third of Texas’ global commerce. The city supports major operations like the Toyota manufacturing plant and depends on imports such as auto parts, electronics, and agricultural goods like avocados. Tariffs, including a 50% levy on aluminum and steel since June, have raised costs in certain industries. Mayor Ron Nirenberg has noted potential disruptions to the automotive sector and trade agreements like the USMCA, while emphasizing the city’s ability to adapt. San Antonio’s exports to Canada, contributing roughly 3.4% to local GDP, face retaliatory tariffs, and Texas’ economic projections suggest a possible 1.5% GDP reduction, though businesses are actively strategizing to mitigate impacts.

Mexico is working to avoid further tariff increases, with Texas businesses monitoring developments closely. Local leaders, including South Texas mayors, are urging federal action to address potential job losses and reduced competitiveness. Tariffs have been paused temporarily in some cases after actions on border security, providing brief relief but ongoing uncertainty.

How Tariffs Affect Businesses in San Antonio

Tariffs introduce both challenges and opportunities for San Antonio’s businesses. Below is an overview of their effects and how the city is responding:

• Managing Cost Changes

Surveys indicate about 60% of Texas businesses report tariff-related cost increases, with 67% expecting higher input costs, compared to 44% during 2018-19 tariffs. In San Antonio, sectors like beauty, floristry, and craft distilleries are seeing price rises for imported goods such as hair products, flowers, and alcohol ingredients. Approximately 55% of businesses plan to pass some costs to customers over the next few months, while others are absorbing costs or finding efficiencies to maintain competitive pricing. Congressman Joaquin Castro has highlighted that tariffs may increase consumer prices, but local businesses are exploring ways to balance these pressures.

Americans expect tariffs to impact prices and small businesses, with potential for higher costs across supply chains. However, some firms are mitigating this by front-loading imports or negotiating better terms with suppliers. Local retailers are adjusting pricing models, and some are exploring bulk purchasing to stabilize costs.

• Industry-Specific Impacts and Adaptations

The automotive industry, a pillar of San Antonio’s economy, faces supply chain adjustments due to tariffs on cross-border components, affecting operations like Toyota’s plant. However, suppliers are streamlining processes and seeking alternative sources, such as regional vendors, to maintain production. Manufacturing has experienced cost increases, but many firms mitigated disruptions by stockpiling inventory earlier this year. Retail and hospitality businesses are adjusting pricing strategies to remain competitive, while some, like local breweries and distilleries, are experimenting with domestic ingredients to reduce reliance on imports. Agricultural importers like SunFed are managing higher costs for produce but are diversifying suppliers, including local farms, to stabilize prices.

Small businesses, such as independent coffee shops and boutiques, are also adapting by focusing on locally sourced products to appeal to community-conscious consumers. Larger manufacturers are investing in supply chain resilience, such as shorter logistics routes, to offset tariff-related delays.

• Navigating Uncertainty with Strategic Planning

Around 41% of businesses anticipate revenue shifts, and 40% are reevaluating capital investments due to tariff uncertainty. In San Antonio, firms are adopting a measured approach, with some pausing expansions to focus on operational efficiency. About 29% are transitioning to domestic suppliers, fostering local economic ties and supporting regional growth. A small fraction (5-6%) consider relocating operations due to cost and time constraints, but most are committed to staying in San Antonio. Interest in technologies like AI and automation is growing, with businesses exploring tools to enhance productivity, streamline inventory management, and reduce reliance on imported goods.

For example, some logistics firms are using AI-driven forecasting to optimize supply chains, while manufacturers are adopting automation to lower labor costs. These innovations not only address tariff challenges but also position San Antonio as a hub for technological advancement.

• Workforce and Competitiveness Considerations

South Texas leaders are engaging with federal officials to safeguard jobs and maintain trade partnerships. Projections suggest slightly below-average job growth for 2025, but San Antonio’s diverse economy provides stability. Some businesses, about 14%, may scale back if pressures intensify, but workforce training programs are helping employees adapt to new demands, such as advanced manufacturing techniques. The city’s trade-driven economy remains competitive, with businesses actively balancing cost increases and growth.

Initiatives like local job fairs and partnerships with institutions such as UT San Antonio are equipping workers with skills for emerging roles. This focus on workforce development ensures businesses can maintain productivity while navigating tariff-related changes.

Real Estate Dynamics

Tariffs also influence San Antonio’s real estate market, affecting both residential and commercial sectors. Imported materials like steel add an estimated $9,200 to new home construction costs, prompting builders to explore cost-effective designs and local materials, such as Texas-sourced lumber. Commercial real estate sees cautious investment from Mexican firms due to tariff uncertainty, with material costs rising 10-20%. However, developers are adapting by sourcing regionally, which supports local suppliers and strengthens the economy.

Meanwhile, economic shifts are boosting interest in luxury real estate, as investors seek stable assets like high-end properties. San Antonio’s real estate market is adjusting, with potential for growth in both affordable and luxury segments. For instance, new housing developments are incorporating modular construction techniques to reduce costs, while commercial projects are prioritizing energy-efficient designs to attract tenants. The city’s growing population and strong job market continue to drive demand for real estate, balancing out some tariff-related pressures.

Tariffs are reshaping San Antonio’s economic landscape, presenting hurdles like rising costs and uncertainty, but also fostering opportunities for innovation, local collaboration, and market adaptation. Businesses are responding with strategic pricing, domestic sourcing, and technology investments, while the real estate sector balances cost pressures with growth in luxury and efficient designs. As U.S.-Mexico trade talks continue to address tariff impacts, San Antonio’s resilience and proactive approach position it to thrive in this evolving environment. 

Feeling the Tariff Squeeze in San Antonio? Let’s Talk.

Whether you're a homeowner, builder, or business owner, tariffs are changing the game. If you're navigating higher costs, delayed projects, or shifting market trends, you're not alone.

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