US President Donald Trump appears to have backtracked on a threat to close the United States-Mexico border – a move that US retailers warned would be a “self-inflicted wound to the American economy” resulting in significant supply chain disruptions.
Trump had planned to close the border this week, unless Mexico “immediately stop ALL illegal immigration coming into the United States through our southern border.” But this has been downgraded to “a one-year warning, and if the drugs don’t stop or largely stop, we’re going to put tariffs on Mexico and products, particularly cars. And if that doesn’t stop the drugs, we close the border.”
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In a letter to Trump administration officials this week, the National Retail Federation (NRF) warned: “There is no way to close the US-Mexico border without inflicting serious damage to the American economy.” However, NRF president and CEO Matthew Shay added: “We share the administration’s goal of fixing the nation’s broken immigration system and enhancing border security.”
According to the NRF, US trade with Mexico exceeds US$1.7bn, with American retailers and consumers relying on Mexico as a source of many different goods, including apparel.
“Closing the border for any length of time would result in significant supply chain disruptions for US retailers,” Shay said. “These disruptions would reverberate throughout the supply chain, impacting everyone from truckers to warehouse workers whose jobs depend on the two-way trade with Mexico. The end result would be job losses, factory shutdowns, increased consumer costs and reduced product availability across the country.”
Shay warned that retailers large and small in border communities would see a significant reduction in daily sales from a border shutdown.
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By GlobalData“Thousands of people who rely on legal border crossings every day would no longer be able to get to work or shop in nearby stores,” Shay explained. “For retailers in US border communities, this would ultimately mean workforce disruptions and reduced sales. American small businesses in those communities would face a disproportionate burden, as many smaller stores depend on legitimate travel across borders for up to half of their daily sales.
“We do not believe any type of border closure would address the ongoing immigration issues facing both Mexico and the US. Congress and the administration, as well as the US and Mexico, must continue to work together to resolve this challenging issue. Resorting to a border closure would merely be a self-inflicted wound to the American economy.”
Under Trump, the US intends to replace the 25-year old NAFTA (North American Free Trade Agreement) with a renegotiated United States-Mexico-Canada Agreement (USMCA) – which is still waiting ratification.
