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THE AFFECTATIONS ON THE BORDER TO THE ECONOMY

Faced with failures in the negotiation between both governments, President Trump threatened to close the border with Mexico to combat undocumented immigration to the United States. Several Mexican analysts argue that it is a Trump tactic to pressure the federal government to comply with its terms in the bilateral migration agenda.
Trump announced on Twitter that he would call on the armed forces to stop the flow of Central American migrants. A few days later, the threat became less drastic and, therefore, more feasible, saying that if the Mexican government failed to stop the passage of migrants and drugs to the United States, it would impose tariffs on Mexico. According to Felicia Sonmez of The Washington Post, Trump diminished the tone of his threat thanks to the pressure exerted by leaders of the most influential companies in the United States. UU
However, decisions such as these affect companies of all sizes and across several sectors in both countries. At the end of the day, EE. UU is the first commercial partner of Mexico (Mexico is the third largest in the US) and exchanges a total of goods and services valued at more than 600 MMD, according to estimates from the Office of the US Trade Representative. UU
What happens with export companies that are not “heavy hands” or “influential” in their respective countries? The Economist published an article explaining that many companies in Queretaro and Jalisco are suffering losses from delays of seven to nine hours at the border, due to the lack of customs agents who are dealing with migration issues instead of speeding up trade.
Similar to what happened in the ports of California in 2014, there is a congestion of trailers at the border, causing delays in deliveries and cancellation of orders. These delays announce how catastrophic it would be for the exporting companies to have a total closure of the border, which would mean accumulated losses of more than 1,000 MDD per day, according to Landeros Volquarts, president of the Mexican Council of Foreign Trade of the West.
The Economist reported that, for several states on our side of the border, EE. UU It is the main destination of its export products, of which between 65 and 70% moves through the highway. It is also important to note that the trade of several American states -such as Texas, California and Michigan- also have Mexico as their main destination. Only Texas had a commercial exchange with our country of more than 18 MMD in July 2018.
These figures are evidence of how a policy emanated from high spheres of government can contaminate other political agendas – in this case, the commercial one – and have repercussions on the daily activity of companies, both in Mexico and the US. UU., Of all sizes and of different sectors.

Do you need your company to prepare for the uncertainty generated by US border policies? Write to info@riesgospoliticos.com.mx to provide you with the advice you need.

Photo by Matthew T Rader on Unsplash

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