Trade Groups Warn of ‘Severe,’ ‘Devastating’ Harm if Trump Closes Southern Border

Trump agrees a border closure would inflict a big “toll” on U.S. commerce but also told a National Republican Congressional Committee dinner on April 2 that national security is more important. “Trade and commerce and making money for our country, it’s all very important,” Trump said. “But to me, the most important job I have is the security of our country, even more important than those other things I talk about.”

The Consumer Technology Association believes the U.S. is “hitting a breaking point at the southern border,” President Gary Shapiro said in an email April 2. Trump’s “inherited broken immigration system and the proposed solution to close down the border will not solve the humanitarian crisis, but will have unintended consequences for international trade” and the U.S.-Mexico-Canada Agreement (USMCA), he said. Any border closing “without a truck exception” would have a “devastating impact on many companies,” and is “inconsistent” with the administration’s “economic agenda,” he said.

The administration’s “message to our trading partners should not be that we might be closed for business, but rather let’s work together as we have with USMCA,” Shapiro said. “Mexico is one of our country’s top export markets for consumer technology goods, and any action that hurts that relationship will slow down the processing of trade and cause more growing pains for Americans who do business with Mexico.”

The U.S. exported $265 billion in goods to Mexico last year, an 8.9 percent increase from 2017, according to an Office of U.S. Trade Representative report last week, citing International Trade Commission data. U.S. imports from Mexico increased 10.3 percent last year to $346.5 billion, it said.

Though NRF believes “the need to address the nation’s immigration challenges is real,” shutting down the border “would be irresponsible and represent a self-inflicted wound to the U.S. economy,” emailed David French, senior vice president-government relations. “Merely threatening a border shutdown is creating uncertainty for American businesses and the complex supply chains that rely on trade throughout North America. If the administration actually followed through on this threat, we will see severe economic consequences.”

Analysts agree the impact to the consumer TV supply chain would be profound. ITC data showed that “just under” 40 percent of the TV units imported to the U.S. in 2018 came from Mexico, emailed Paul Gagnon, IHS Markit executive director-research and analysis. A border closure “would probably have a pretty substantial impact” on the TV supply chain, he said.

Beyond the impact of an “immediate cessation of imports” from Mexico, “assuming there aren’t certain exemptions or such,” Gagnon predicts there would be a “hard shift ironically to more TV imports from China,” where about 53 percent of the units imported to the U.S. came from in 2018, he said. “However, it would certainly take some time for the supply chain ordering and resources to line up.”

Bob O’Brien, president of Display Supply Chain Consultants, predicted premium-tier TV brands likely would bear the biggest brunt from a border closure. In revenue terms, Mexico’s share of U.S. TV imports was 62 percent in 2018, O’Brien said, also citing ITC data. Though Mexico’s share declined 2 percentage points from 2017, the average wholesale value of a TV imported from Mexico last year was $450, well above the average $186 of a set imported from China, he said.