Border activity makes up a relatively larger share of Mexico’s economy than the United States’, meaning Mexico would most likely have more economic damage from a border closing, Mr. Zandi said.
But that does not mean the United States would be in a winning position. Communities across the country would probably see supply chain disruptions, product shortages, seizures in stock and bond markets and a plunge in already-fragile business confidence, Mr. Zandi said. The disruption would be especially sharp in the border states of California, Arizona, New Mexico and Texas, which all have Mexico as their No. 1 export market.
Any closure could have far-ranging implications for a wide range of industries — including automotive, electronics and apparel — that source small components and deliver their products on a just-in-time basis on both sides of the border.
It could also be devastating for the agriculture industry. Since the North American Free Trade Agreement began in 1994, American farmers have moved toward specializing in corn, soybeans, chicken, dairy, pork and beef to supply to Mexico, while Mexican farmers have specialized in fresh fruits and vegetables to send to the United States. Any delays in deliveries of these products could lead to near immediate price hikes and empty supermarket shelves, which would hit low-income Mexicans and Americans the hardest.
Christin Fernandez, the vice president for communications at the Retail Industry Leaders Association, said that slowing or halting screenings at major ports near the border would lead to product delays and potentially higher shipping costs.
“The entire retail ecosystem is sustained on the expectation that America’s retailers can provide consumers with the goods they want and need, when they need it, at the best possible prices,” Ms. Fernandez said. “If our suppliers are feeling the pain, retailers will feel the pain, and, ultimately, it is consumers that will bear the burden.”
Stock markets do not appear to be pricing in any risk of a border closure. The S&P 500 was essentially unchanged on Tuesday, and it remains near a six-month high.
Source Article from https://www.nytimes.com/2019/04/02/us/politics/trump-mexico-border-economy.html
Comments