How closing Mexico border could hurt US

  • 1

OVER THE last several days, US President Donald Trump has threatened to close the Mexico border as a measure to check illegal immigration. Last week, he tweeted: “… If for any reason Mexico stops apprehending and bringing the illegals back to where they came from, the U.S. will be forced to Tariff at 25% all cars made in Mexico and shipped over the Border to us. If that doesn’t work, which it will, I will close the Border.”
While Trump has projected this as a punishment for Mexico, economists have warned that any such move would be disastrous for the US economy. The North American Free Trade Agreement (NAFTA) facilitates trade by cutting tariffs and streamlining regulations. Reports citing figures from the US Chamber of Commerce said nearly $1.7 billion of goods and services flow across the Mexico border daily. These include jeans, cars, flat-screen TVs — and avocados, beloved to many Americans.
“… What Trump is talking about now, shutting the southern border, would be catastrophic. It’s just absurd,” The New York Times quoted Gary Hufbauer of the Peterson Institute for International Economics as saying.Some of the likely impacts if the border were indeed to close:The NYT report listed US manufacture as among the biggest victims of a border shutdown. US industries rely on Mexico, either by selling goods and services into Mexico or by using Mexican materials in their products. Mexico is the United States’ third largest trading partner, with the latter importing $349.6 billion from Mexico in 2018, and exporting $265 billion, The NYT said citing statistics from the Union Nations’ International Trade Center.
Among those affected would be automobile makers, with supply chains disrupted, as would those manufacturers of flat-screen TVs, computer hardware and medical devices, besides the apparel industry that sources raw materials from the US and makes finished products in Mexico. Mexico also depends on the US for natural gas through cross-border pipelines, while hundreds of thousands of US jobs are tied to transportation to and from Mexico.Overall, The NYT said, top multinational companies would be affected — including Ford, Toyota, Boeing— and so would countless small- and medium-size businesses.The US depends on Mexico for fresh fruit and vegetables like avocados — Mexico supplies 80% of the avocados eaten in the US — as well as tomatoes, strawberries, grapes and mangoes, while Mexico relies on US soybeans, corn, dairy products, The NYT said. Shutting the border would most likely lead to dwindling of supplies, a spike in prices of food items imported from Mexico, and a drop in prices of US crops besides a loss of market.