The current slowdown at the US-Mexico border is causing substantial economic harms. Trade volume has grown substantially, more than doubling over the past 20 years and up 55% between 2010 and 2018. During 2018, total trade volume between the United States and Mexico exceeded $611.5 billion, with $265.0 billion in US exports to Mexico and $346.5 billion in imports from Mexico. In fact, recent data for January and February of 2019 reveals that, for the first time, Mexico is the top US trading partner.
The Perryman Group's Bordernomics study analyzes the economy of the US-Mexico border region in order to improve understanding of regional dynamics and identify actions which could generate meaningful improvement. The full study provides background information and a summary of current economic conditions, addresses the importance of NAFTA, describes challenges and opportunities faced in the border region, and estimates the business activity and jobs which could be added with enhanced cooperation among the US-Mexico border states.
In July 2014, National Guard troops in Texas were deployed to the US-Mexico border as a response to the influx of immigrants (mostly children) from Honduras, Guatemala, and El Salvador. While troops have been sent to the area on various occasions in the past, the deployment raised concern among some area residents and community leaders who fear that it could take a toll on the regional economy.
Dr. Perryman quantifies the impact and issues with the latest bill.
Dr. Perryman explains why this idea would not be an effective strategy, and provides an alternative solution.
The chaos at the border is now impacting the flow of goods back and forth. Dr. Perryman has been looking at the cost to our economy.
The border adjustment tax being discussed as part of a House Republican tax package might bring in more revenue, but for a lot of reasons, Dr. Perryman calls it a bad idea.
What does Dr. Perryman think about the border tax being discussed by the Trump administration as a way of paying for a wall? Not much.
Since Donald Trump's election, talk of the wall and trade restrictions has put pressure on the Mexican Peso. Dr. Perryman says we can ill afford any issues with a major trading partner.
President Trump has threatened to impose 5% tariffs on all goods from Mexico on June 10 if Mexico does not take action to slow the number of immigrants at the border. As I am writing, he has vowed to continue to escalate the levies to 25%, Mexico has threatened to retaliate, and Congress has announced that it will stop them with enough votes to override a veto. Who knows what the status will be when you are reading this? Even if the situation is resolved, the threat of such action increases uncertainty and makes it more difficult to finalize a replacement for the North American Free Trade Agreement. If the tariffs actually go into effect and are maintained, it would cost hundreds of thousands of US jobs.