Trump’s Threats to Close the Border Add Thousands to Shipping Costs
Date: Friday, November 30, 2018
That doesn’t mean businesses here in Tijuana are resting easy. They’re plotting alternate routes and speeding up shipments from factories that produce everything from semiconductors to pacemakers to seat belts. After the U.S. shocked locals by closing San Ysidro for more than four hours on Sunday, President Donald Trump’s recent Twitter-threat about sealing off the entire border between Mexico and the U.S. didn’t seem so absurd anymore.
“That would be the nuclear option,” said Aram Hodoyan, head of Tijuana’s Economic Development Council. But with Trump, “who knows?”
The immediate concern is another limited shutdown that would really hit commercial traffic between the two countries. Authorities closed San Ysidro amid the chaos of clashes between Central American migrants, Mexican police guarding the crossing and U.S. agents using tear gas to thwart the migrants’ advance.
Most business traffic wasn’t affected; trucks transporting goods typically use the Otay Mesa Port of Entry a few miles to the east.
But if Otay was suddenly blocked, “that would be total chaos for us,” said Luis Hernandez, head of the National Council of Export Manufacturing Industries.
With billions of dollars at stake, companies aren’t taking chances. Many trucks are rumbling through Otay about one-third full. Manufacturing managers aren’t waiting for them to be completely loaded, pushing goods out as quickly as possibly, Hernandez said.
That’s expensive. Sending one truck across costs about $600, so splitting a delivery into three means spending $1,200 more. Around 8,000 trucks travel through Otay on a typical day.
At his office in Tijuana, Hernandez has been bombarded by calls from alarmed customers and manufacturers who don’t take the three ports of entry between Tijuana and San Diego for granted anymore. The border seems to be a far less predictable place.
“They’re calling me all day,” he said. “What do I know? What am I doing? How can we anticipate what’s going to happen?”
Two-way trade between Mexico and the U.S. totals about $1.3 billion per day, according to Mary E. Lovely, an economist at Syracuse University and senior fellow with the Peterson Institute for International Economics. Some manufactured components cross the border multiple times before ending up in a finished product.
‘No One Knows’
The San Ysidro shutdown cost 134 million pesos ($6.55 million) in lost wages and canceled reservations and appointments, according to Kurt Honold, local head for the national group Business Coordinating Council.
The crossing is used by U.S. children who live in Tijuana and walk to school in San Diego. Retirees from San Diego or Chula Vista go south to obtain their medicine at a discount. Thousands of commuters with Sentri identification cards go back and forth between home and work.
“The big companies can diversify, can think of options,” said Hodoyan of the Economic Development Council. “But the local dentists, pharmacies, restaurants—they’ll be hit if people stop coming to Tijuana because they fear the border might be closed at any given point.”
Hernandez checks with Mexican border officials multiple times a day to make sure the route at Otay is still secure. The concern is that some of the thousands of Central Americans still in Tijuana—most of them staying in an emergency camp set up in a sports complex—will give up on San Ysidro and head to the other port. The migrants, who traveled to northern Mexico in a group, are seeking asylum in the U.S.
Trump’s total-shutdown threat is a hollow one, said Mark Zandi, chief economist at Moody’s Analytics Inc., because “even partially closing the U.S.-Mexican border for just a few days would be highly disruptive to the U.S. economy.”
Business people in Tijuana and border-trade watchers aren’t so sure that fact would sway the president.
“No one really knows what will happen,” said Christine McDaniel, a senior research fellow at Mercatus Center at George Mason University in Virginia, “until it happens.”