What would happen to the Mexican economy in case of a border closure?

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After Trump threatened to close the border with Mexico, the economy of the Latin American country could face enormous difficulties

During the last weeks, the president of the United States, Donald Trump, has threatened to close the border with Mexico in order to stop the flow of illegal migrants and drugs from the Latin American country. For example, on March 30, he stated through a tweet that "Mexico must use its very strong immigration laws to stop the many thousands of people trying to get in the USA. Our detention areas are maxed out & we will take no more illegals. Next step is to close the Border! This will also help us with stopping the Drug flow from Mexico! "

Leer en español: ¿Qué le esperaría a la economía mexicana en caso de un cierre fronterizo?

Almost immediately after the first threats and despite the lack of an official confirmation of the closure, the economic effects began to be felt. According to CNN, Americans who usually travel to Mexico to buy medications have increased their purchases since Trump began his threats, while suppliers of goods from the southern border have informed their customers of the possibility of delays their deliveries.

According to the CNN report, the hotel industry north of the border can also be affected as many Mexicans tend to travel to the United States to spend the Easter holidays and a closure of the border could mean the decrease and cancellation of reservations made by Latin American citizens.

How far is Trump willing to go?

A possible border closure could be devastating for the Mexican economy, whose forecasts for growth between 2019 and 2020 are not very favorable. According to Forbes, the International Monetary Fund cut Mexico's GDP forecasts during these two years, noting that it would not even reach 2%. This would be aggravated in case of a border closure to the extent that a large part of the Mexican economy depends on trade with its northern neighbor.

Evidence of this is that, as reported by El Espectador, in 2018 more than 85% of the trade between Mexico and the United States was carried out by land, while the border states in northern Mexico provided 22% of the country's GDP. Moreover, according to a government document recently released by Mexican President Andrés Manuel López Obrador, in case Trump closes the border, the Mexican state would have losses of up to USD $ 1,000 million per day.

Read also: Trump's threats are already reflected in the price of avocados

Despite the initial threats, in recent days Trump has changed his mind, or at least the initial threat. Evidence of this is one of the tweets he made on April 5: "Mexico, for the first time in decades, is meaningfully apprehending illegals at THEIR Southern Border, before the long march up to the U.S. This is great and the way it should be. The big flow will stop……"

However, if for some reason Mexico stops stopping and sending the illegals back to where they came from, the United States will be forced to apply tariffs of 25% on all cars made in Mexico and sent to us across the border. "If that does not work, and it will work, I'll close the border."

Trump's change of mind is surprising because, as noted by the Secretary of Foreign Affairs of Mexico, Marcelo Ebrad, his government had not changed migratory policies. Similarly, the Mexican ambassador to the United States, Martha Bárcena, affirmed that, despite the fact that the Latin American country was working on the organization of its border, the flow of migrants would not stop. According to Telemundo, Trump's change of opinion could come from alerts coming from White House advisers, governors of US border cities and economists who have highlighted the economic consequences of the border closure for both countries, as this would interrupt supply chains and would increase prices of many products in the United States.

LatinAmerican Post | Juan Diego Bogotá

Translated from "¿Qué le esperaría a la economía mexicana en caso de un cierre fronterizo?" ​​​​​