Border shutdown? How US consumers could be impacted

By U.S. EconomyFOXBusiness

Trump’s plan to close the southern border may hurt the US economy

Trump 2020 strategic communications director Marc Lotter discusses President Trump’s threat to close the southern border.

As President Trump debates closing the U.S. border with Mexico in an attempt to curb the stream of illegal immigration, many industries are warning that U.S. companies and consumers would bear a substantial burden from that action.

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Trump reiterated claims on Tuesday that certain countries in Central America have been taking money from the U.S., while offering nothing to the U.S. in return.

On Monday, the Department of Homeland Security said it would redeploy hundreds of Customs and Border Protection personnel to the U.S.-Mexico border in an emergency surge operation, as the “crisis” at the border “worse[ned].”

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President Trump and his administration have repeated threats to shut down the border, after the president cut aid to three Central American countries that he accused of deliberately sending migrants to the U.S.

Trump said Friday that there was a “very good likelihood” the border could be shut down this week,  a move which likely would have economic consequences for both economies.

Considering many industries across both countries are highly integrated, supply chains could suffer crippling disruptions, ultimately leading to a spike in some consumer prices.

In 2018, the U.S. imported $346.5 billion worth of goods from Mexico, according to data from the U.S. Census Bureau. Exports were valued at $265 billion during the same time period.

Every day more than $1.6 billion worth of goods crosses the border, according to the U.S. Chamber of Commerce.

Here’s a look at what could be affected:

Autos

U.S. automakers stand to be among the most affected if the link to Mexico is shut. Car production facilities rely on trade with Mexico for parts in order to complete final assembly.

Kristin Dziczek, Vice President for the Center for Automotive Research, told FOX Business’ Blake Burman that if the border is closed, the U.S. auto industry would shut down within a week. She says nearly every vehicle in the U.S. is dependent on parts from Mexico. Some plants could be down within a few days.

A spokesperson for the Motor & Equipment Manufacturers Association made similar comments when contacted by FOX Business, saying auto production would be impacted in less than one week and directly affect U.S. jobs.

Depending on the extent and length of the border closure some increased costs and damages to companies could be passed on to consumers.

Produce

A big headline coming from a potential border shutdown is that there could be an avocado shortage in the U.S. which imports a substantial amount of the fruit from Mexico.

According to The New York Times, Mexico supplies 80 percent of the avocados consumed in the U.S.

In addition to the coveted avocado, the U.S. receives a large amount of other fresh fruit from Mexico – total imports of which were valued at $6 billion in 2017. Other fruit imports include mangoes, grapes, bananas and various types of berries.

Vegetables would also be impacted. Mexico exports a large amount of tomatoes, eggplant and cucumbers to the U.S.

The U.S. imported $5.5 billion worth of fresh vegetables from Mexico in 2017.

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Liquor

According to data from the Beer Institute, the U.S. imported 773 million gallons of beer from Mexico in 2018, an increase of 8.6 percent from the year prior and more than it receives from any other country.

In the first 11 months of 2018, the U.S. imported 172.4 million liters of tequila from Mexico according to the country’s National Chamber of the Tequila Industry.

Mexico also exports a large amount of wine.