A Wall Won’t Secure the U.S.-Mexico Border, but Economic Policy Could

2/14/2017 Harvard Business Review

immigrationPresident Trump campaigned on a promise to “build a great, great wall on our southern border.” After he was inaugurated as president, his administration said it was considering taxing imports from Mexico to cover the estimated cost of $21.6 billion. (That Department of Homeland Security estimate is roughly double Trump’s price tag of $8–$12 billion; others peg the cost much higher). Many economists were quick to note how such a tax would raise the cost of Mexican goods in the United States and violate Trump’s other campaign promise to “make Mexico pay.” In practice, Americans would pay twice: up front for the wall, and again in the form of higher prices for Mexican goods.

It’s not realistic to erect a physical barrier and to shove the costs on a top trading partner without weakening your own economy and putting in jeopardy the 1.1 million American jobs that depend on that trade. But we could use economic forces, rather than flying in the face of them. What the United States needs are smart economic policies that disrupt the market forces that are currently driving undocumented immigration.

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Trump says he will bring down the price of wall on Mexico’s border

2/11/2017 Reuters

Border fencePresident Donald Trump pushed back early on Saturday on assertions that the wall he wants built on the U.S. border with Mexico would cost more than anticipated and said he would reduce the price.

Trump made his comments in two Twitter posts but did not say how he would bring down the cost of the wall.

Reuters on Thursday published details of an internal report by the Department of Homeland Security that estimated the price of a wall along the entire border at $21.6 billion. During his presidential campaign Trump had cited a $12 billion figure.

“I am reading that the great border WALL will cost more than the government originally thought, but I have not gotten involved in the … design or negotiations yet,” Trump tweeted from his Florida resort, where he is hosting Japanese Prime Minister Shinzo Abe.

“When I do, just like with the F-35 FighterJet or the Air Force One Program, price will come WAY DOWN!”

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Cartel power struggle fueling rising violence in Mexico: official

2/11/2017 Reuters

m16 gun closeupSurging gang violence in swaths of northern Mexico is likely due to an internal power struggle within the fractured Sinaloa cartel, Defense Minister Salvador Cienfuegos said on Saturday.

Joaquin “El Chapo” Guzman, the powerful boss of the Sinaloa cartel, was extradited to the United States last month and is currently awaiting trial in a New York jail.

Ciefuegos told reporters in Culiacan, the capital of northwestern Sinaloa state, that the leadership vacuum following Guzman’s extradition is likely behind a recent spike in violence.

“In the absence of their leader, (rival factions) are fighting over who will control the organization,” he said.

“I think that’s what is happening,” said Cienfuegos, who is Mexico’s top military commander.

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U.S.-Mexican energy trade a bright spot

2/10/2017 United Press International

energy - oil barrelsU.S. crude oil exported to Mexico is one of the more lucrative commodities for North American energy trade, the U.S. Energy Department reported.

A daily briefing from the Energy Department’s Energy Information Administration reported that total energy exports to Mexico last year was one of the more valued exports in North America.

While the situation could change in the future because of amendments to rules governing U.S. crude oil exports, the EIA said Mexico is currently second only to Canada when it comes to total trade in energy products.

“For 2016, the value of U.S. energy exports to Mexico was $20.2 billion, while the value of U.S. energy imports from that country was $8.7 billion,” the government brief read.

Last year, energy products represented around 9 percent of all U.S. exports to Mexico and 3 percent of all U.S. imports from Mexico. The United States last year sent on average a half million barrels of crude oil per day to Mexico. Meanwhile, Mexico is the fourth-largest exporter or crude oil to the United States, behind Venezuela.

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Messing With Mexico Is A Mistake

2/9/2017 Forbes

mexican-flag1For every supply chain executive adding jobs in Mexico, 2.4 are also creating jobs in the United States. In fact, among 129 managers who said Mexico was one of their top three countries for planned hiring over the next three years, 81 said their top overall country for new job creation was the US – Mexico was second or third. As for those who are actually shifting work southward, this group is less than 5% of our total sample of 1,179 supply chain executives worldwide.

Mexico is the second largest exporter to the US. It’s also the second largest importer from the US. Michigan, which shares a border with Canada, is the third-ranked state in terms of exports to Mexico. This is mostly auto parts bound for assembly into finished vehicles.

A huge portion of everything we produce and consume – from natural gas and food to cars and computers – makes its way across the border, often more than once. The North American supply chain ecosystem is so intertwined that simplistic efforts to force business to alter hiring plans will almost certainly end badly.

Costs will go up, supply availability will suffer and companies will respond with even faster moves to robotics and automation.

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Produce, Auto Parts, Electronics: How Mexico Tariff Could Cost Consumers

2/8/2017 CBS DWF

produceLAREDO The economic impact of President Trump’s executive order to build a U.S./Mexico border wall is already being felt in Laredo.

It’s the largest port of entry for imported goods from Mexico where every day some 12,000 trucks cross over.

“This is the most important bridge on the border. Forty percent of the traffic crosses through Laredo, and most of that traffic crosses through this particular bridge,” said President of Laredo’s Chamber of Commerce, Miguel Conchas.

He said that last year Laredo saw some $280 billion in goods cross the border.

“We see everything under the sun that comes through. Electronics, auto parts, and produce.”

And now that the Trump administration is considering a 5 to 20 percent tax increase on the goods to pay for the controversial border wall, many importers who deal in produce are left concerned how it will impact their business.

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Mexico, Central America to discuss migration under Trump: ambassador

2/8/2017 Reuters

6300375991_a362f0261a_nThe foreign ministers of Mexico, Honduras, El Salvador and Guatemala will meet in Mexico next week to discuss immigration policy responses to Donald Trump’s U.S. presidency, the Honduran ambassador to Mexico said on Wednesday.

Central American ministers want to open lines of communication with Mexico’s Foreign Minister Luis Videgaray to discuss problems with migration and the flow of Central Americans, Alden Rivera said in an interview.

“It’s a first point of contact … we don’t expect to have an answer,” Rivera said.

The meeting between Videgaray and the three Central Americans will take place in Mexico City, Rivera said.

Mexico’s foreign ministry said that there was no meeting officially in the calendar yet.

Rivera said his main concern was a change in U.S. immigration policy and how Mexico reacts to that, which would have an impact on Central America.

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