Rising Costs and Tariffs Drive Hispanic Business Owners Away from GOP
Washington, Friday, 16 January 2026.
Recent data indicates a sharp reversal in political allegiance among Hispanic small business owners, a demographic critical to the Republican Party’s 2024 success. While Donald Trump secured 48% of the Hispanic vote in the last presidential election, his current favorability has plummeted to 28% amid growing economic distress. Business leaders in key regions like South Texas cite aggressive tariffs and labor shortages as primary drivers for this shift, with Laredo’s trade-dependent economy shrinking by 1% despite broader national trends. With over 70% of Hispanic entrepreneurs now ranking cost-of-living increases as their top concern, this dissatisfaction is already manifesting in local election losses for the GOP. As the 2026 midterms near, the administration faces a formidable challenge: the very economic policies intended to bolster American industry appear to be dismantling the coalition that returned them to power.
A Sense of Betrayal Among Entrepreneurs
The disillusionment among Hispanic business leaders stems from a widening gap between campaign promises and economic reality. Javier Palomarez, president and CEO of the U.S. Hispanic Business Council, articulates this frustration, noting that while the economy and immigration were principal talking points for President Trump, the community “didn’t get what we thought we were going to get” [1]. This sentiment is quantifiable: while Trump secured a historic 48% of the Hispanic vote in 2024, his favorability within the demographic has since dropped to 28%, marking a significant 13-point decrease since February 2025 [1]. For many, the administration’s policies feel like a reversal of support; Monica Villalobos of the Arizona Hispanic Chamber of Commerce describes the current atmosphere as a “sense of betrayal” due to what she characterizes as excessive administrative overreach [1].
Macroeconomic Headwinds and Inflation
At the macroeconomic level, the metrics paint a challenging picture for small business owners who operate on thin margins. During the first year of Trump’s second term, GDP growth has nearly halved compared to 2024 levels [2]. While the Consumer Price Index report released on January 13, 2026, showed inflation rising at a slower pace, the cumulative effect remains burdensome [1]. Inflation stands at 2.7%, with the rising costs of utilities and groceries continuing to pressure lower- and middle-income families [2]. Consequently, more than 70% of Hispanic business owners now rank the ongoing cost-of-living crisis as a top concern, and 42% anticipate the economic situation will deteriorate further [2]. This pessimism is reflected in broader polling, where 48% of Hispanic respondents recently reported that the cost of living is the worst they have ever experienced [1].
Tariffs and Trade Disruptions at the Border
Nowhere is the economic strain more visible than in the trade-dependent communities of South Texas, a region that swung heavily toward the GOP in 2024. In Laredo, home to the Gateway to the Americas International Bridge, the local economy has historically grown between 5% and 7% annually [3]. However, following the implementation of the administration’s tariff-centric trade agenda, the city’s economy has contracted by 1% this year [3]. J.D. Gonzalez, chair of the National Customs Brokers and Forwarders Association of America, attributes this decline directly to international trade disputes [3]. The impact is tangible for local business owners; La Mina Cantina in Laredo, for instance, reports that business is going “very poorly” with expectations that conditions will worsen [3]. Nationally, 75% of Americans now believe these tariffs are raising prices, further complicating the administration’s economic narrative [4].
Labor Shortages and Immigration Policy
Beyond tariffs, aggressive changes to immigration policy have exacerbated labor shortages, hitting industries like logistics and construction particularly hard. In August 2025, the Department of Homeland Security paused the issuance of foreign visas for truck drivers, a move that coincided with new English-language proficiency requirements that removed over 9,000 freight truck drivers from service [3]. This constriction of the labor supply has stalled development; in South Texas, funding from Mexican investors for U.S. construction projects has dried up, and local builders warn that businesses will fail if the current trajectory continues [3]. These policies have alienated a voting bloc that previously prioritized economic stability over immigration concerns; recent data shows 65% of U.S. Hispanics disapprove of the administration’s immigration approach, and fear of deportation has risen by 10 points since March 2025 [1].
Electoral Consequences and Midterm Implications
The economic dissatisfaction is already translating into electoral losses for the Republican Party, signaling a potential upheaval in the upcoming 2026 midterms. In November 2025, Passaic County, New Jersey—where Latinos had narrowly supported Trump in 2024—swung back to support a Democratic governor [1]. Similarly, in December 2025, Miami elected a Democratic mayor for the first time in 28 years, a stunning reversal in a stronghold of conservative Latino support [1]. Democratic strategists argue that Hispanic families are voting based on the conclusion that their lives are “actually worse” under new leadership [1]. With 68% of U.S. Hispanics reporting their situation is worse than the previous year [1], the GOP faces a critical challenge: stabilizing the economy before the coalition that powered their 2024 comeback disintegrates entirely.