Brocker.Org: Business on the US-Mexico border is already feeling the fallout from Trump’s squabble with Mexico

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Donald Trump with Enrique
Peña Nieto.

Henry
Romero/REUTERS


During Donald Trump’s presidential campaign, the Mexican peso
often tracked his poll numbers, rising when he fell
and falling when he surged.

And, in keeping with that trend, in the days since he’s taken
office the peso has mirrored the seeming deterioration of
US-Mexican relations.

The currency’s swings haven’t taken place in a vacuum, however.

Commerce on the frontier, where businesses and consumers often
stretch across the border, has started to feel the uncertainty of
US-Mexico relations in the Donald Trump era.

“There are businesses that depend on the ways that the border is
porous, and there are businesses that depend on the ways that the
border is solid. The former are mostly in retail,” Patrick Iber,
an assistant professor of history at the University of Texas at
El Paso, told Business Insider.

“If you look at a map of El Paso, there is a neighborhood called
Chihuahuita right across the main bridge crossing between here
and Juárez,” in Mexico, Iber said. “And lots of relatively poor
people [from Mexico] … shop in the downscale wholesale markets
that line the streets there.”

The peso’s struggles, rising nearly 13% against the dollar since the beginning of
November, have negatively affected the purchasing power of
Mexicans shopping in the US, in turn putting a chill on outlets
on the US side of the border that cater to them.

“These are the places that I have heard are failing,” Iber said
of the markets in Chihuahuita, “because they depend on the small
amounts of disposal income among relatively poor Mexican
shoppers.”


El Paso lucha libre Mexico Donald Trump graffiti vandalism painting
Graffiti
of a wrestler applying a choke hold to US President Donald Trump
shown in El Paso, Texas, January 17, 2017.

REUTERS/Tomas Bravo

But the Mexican consumption in El Paso and Texas more broadly is
not limited to people shopping at stalls within walking distance
of the border.

“The shoppers who come over from Mexico are very important,
especially for taxing entities,” David Stout, the El Paso County
commissioner from Precinct 2, told The Morning News in December. “We rely
heavily on the sales tax revenue we generate.”

The Rio Grande Valley, east of El Paso at the the southern tip of
Texas, has some of the highest-volume retail space in the US
because of visitors coming from Mexico, according to The Dallas Morning News.

While wealthier Mexican shoppers have, for the time being, been
undeterred by the peso’s fall against the dollar (“They don’t
even look at the prices,” an El Paso sales associate told The Morning News), the weaker exchange
rate “has stopped some budget-conscious Mexican shoppers from
crossing as often to buy in Texas,” according to The Morning News.


Texas El Paso Mexico Ciudad Juarez shopping shoppers mall
Shoppers
make their way down El Paso Street, November 10, 2006, in
downtown El Paso, Texas. The street is lined with stores that are
crowded with shoppers from both Ciudad Juarez, Mexico, and El
Paso.

(AP Photo/Victor
Calzada)


Poor purchasing power isn’t the only recent development making
Mexicans reluctant to cross the border. Trump’s hardline position on deportation and
border enforcement has sent a chill throughout the immigrant
community in the US, particularly in Texas.

“Even at UTEP, something like 6% of our student body crosses the
Juárez bridge daily to attend school,” Iber said. With Trump’s
move toward a more aggressive deportation policy that, according
to one immigration lawyer, gives the administration “carte blanche” to round up immigrants in the
US, “People are naturally, and rightly worried,” Iber added.

“One graduate student saw an El Paso lawyer tweet that even if
you have a legal visa, don’t cross the border after
6pm because border
patrol agents were confiscating visas,” Iber told Business
Insider.

“I can’t confirm that, but people hear those kinds of rumors
(which may well be true), and it threatens the legal crossings
that take place by the thousands every day. Families with
relatives on both sides will be afraid to visit each other.”


Mexico Ciudad Juarez El Paso border crossing migrant immigrant
People
walk on the international border bridge Paso del Norte to cross
to El Paso, Texas, from Ciudad Juarez, Mexico, December 28,
2016.

REUTERS/Jose Luis
Gonzalez


The business community in Texas, which went to Trump in the
election by nearly a million votes, has also blanched at the
president’s apparent efforts to redo or even scrap the NAFTA
trade deal that has powered US-Mexico commerce for more than 20
years.

In June 2016, at a private fundraiser for Trump, Dennis Nixon, a
banker in Laredo, Texas, and one the event’s hosts, sent a
message to the then presidential candidate during his
introduction.

“Mr. Trump, we must support trade, but I agree we need fair trade
… And here in South Texas, NAFTA meets the definition,” Nixon
said, according to The Texas Tribune.

While Nixon said he agreed with Trump’s assertions that US
immigration is “broken,” he differed with Trump’s stated approach
of upping spending and enforcement, saying “that the federal government already
spends more on border security than all the federal law
enforcement combined.”

Trump appeared to acknowledge Nixon’s remarks during his own
comments at the fundraiser, but he later mocked the banker and
dismissed the idea that being politically conservative meant
supporting free trade.

Who cares?” Trump said just hours later at a
rally.


undocumented immigrants border patrol
A
US Border Patrol agent leads undocumented immigrants after
capturing them near the US-Mexico border on December 7, 2015,
near Rio Grande City, Texas.

John
Moore/Getty


Since Trump’s election, business leaders in both the US and
Mexico have turned their attention to defending open cross-border
trade, looking to tout the benefits both countries have gleaned
from it.

“You have powerful people from Mexico talking, drinking, having
dinner with very powerful Texas people,” James Hollifield, a
professor at Southern Methodist University and director the
school’s Tower Center for Political Studies, told The Morning News in December.

“These guys and gals have known each other for years … They
will push this agenda,” Hollifield said. “You will see a powerful
binational coalition forming between these two countries.”

Indeed, Mexico is the US’s second-largest export market and
third-largest overall trade partner. In 2015, daily bilateral
trade was worth $1.46 billion.

Texas’ imports from Mexico were worth more than $84 billion in 2015, more than double the
value of imports from the state’s second-biggest source, China,
and more than five times the value of Texas’ imports from Canada.


Cargo trucks tractor trailer US Mexico border crossing Ciudad Juarez El Paso
Trucks
stand at the international border bridge Zaragoza to cross over
to El Paso, Texas, in Ciudad Juarez, Mexico, December 20,
2016.

REUTERS/Jose Luis
Gonzalez


Based on the value of 2015’s imports, Texas would pay $16.8 billion more for the same goods and
services if the 20% import tariff floated by the Trump
administration this week were applied.

The administration quickly walked that proposal back, saying it
was just an example of a plan to fund construction of Trump’s
vaunted border wall, but many were quick to note the deleterious
impact it would have on consumers in the US.

“A 20% tax on Mex.imports to pay 4 the #BorderWall wud hav the
same impact as a category 5 hurricane on the [Rio Grande
Valley]~catastrophic&hard 2 overcome,” tweeted Reuben O. Villarreal, a Republican and
former mayor of Rio Grande City, which is on the Texas-Mexico
border.


Mexico Michoacan avocado farmer farm
A
woman prepares a bag of avocados in Mexico City, August 9,
2016.

AP Photo/Nick
Wagner


“We don’t produce vegetables here in the states” in the winter,
said Alfredo Duarte, president and cofounder
of Taxco Produce Inc., which is based in Dallas.

“We have to import vegetables,” Duarte added. “If people are
still wanting to eat guacamole on Super Bowl day, we’ll just go
back to the time when we were paying $80 a case for avocados from
California about 15 years ago.”

A case, which can contain 30 to 60 avocados, currently costs
about $40, according to The Morning News.

“Texas’ working families and our economy depend on a strong
relationship with Mexico,” said Texas Democratic Party executive
director Crystal Perkins. “Minority President Donald Trump’s
20-percent tax will kill Texas jobs, raise the price of goods for
Texas families, and slaughter Texas’ relationship with its
largest trading partner.”

Trump’s ultimate trade policy, and what the final form his border
wall will be, are still up in the air. But his aggressive posture
toward the intimate relationships — both commercial and familial
— that have formed along the US-Mexico border has already been
felt.

“I don’t know that we’ve ever felt safe again,” Francisca
Jimenez, a cleaning woman in Ciudad Juarez, told The Morning News in December. “There’s
also more uncertainty for Mexicans here in and in the United
States with the arrival of el señor Trump.”


Trump border
Republican
presidential candidate Donald Trump attends a news conference
with the US-Mexico border in the background, outside Laredo,
Texas.

Reuters/Rick
Wilking


“If Trump does what he has said he will do, it is going to affect
us,” truck driver Roman Diaz, 45, told AFP in January, while waiting to cross
into California from Tijuana.

Mexican truckers wait years to get permits to cross into the US,
joining the flow of 400,000 vehicles and a million people
who cross the border into the US every day.

“We won’t be able to cross any more,” Diaz said. “This job of
ours will be over. The uncertainty is unbearable.”

“The total impact of all this is hard to gauge at the moment,
because it depends a great deal on how these threats are
implemented,” Iber told Business Insider of the consequences of
Trump’s border policies.

“At the moment, net migration with Mexico is near zero. But if
Trump’s policies force Mexico into a depression, we’re likely to
get more undocumented immigration to the U.S., not less,” he
added. “It’s a complex equilibrium at the moment, full of
injustices, that Trump seems determined to make worse.”

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