Coronavirus puts a squeeze on US-Mexico border 

Hello there from Washington, where Democratic and Republican lawmakers on Capitol Hill have struck a $2tn stimulus deal to provide a boost for US businesses and shore up the sliding economy. It stands to be the largest congressional bailout in US history. From the capital to the border, where we take a look at how bad border closures between the US, Canada and Mexico are, while the Person in the News is top EU Brexit negotiator Michel Barnier. 

Commercial freight trucks line up to cross into the US from Mexico © Getty Images

Businesses cast uneasy eye as goods move between the countries

Throughout his presidency, Donald Trump has not shown much love for Mexico. But on Saturday he and his counterpart, Andrés Manuel López Obrador, agreed to work to keep trade and cargo flowing across the border even as they mostly shut it down. 

The spread of coronavirus has prompted extraordinary measures across the world, including the sort of border closures that would have been unthinkable only six months ago. The US has now partially shut the borders with its two neighbouring countries, allowing cargo and workers to pass, but halting the flow of all other travel, including migrants and asylum seekers, in a bid to stop coronavirus.

There is no doubt that closing the Mexican and Canadian borders to trade would cause economic damage. Put simply, the US sent more than $256bn of goods to Mexico — its second-largest export market — in 2019, according to figures from the US Census Bureau. It imports more than $358bn of goods. The US imports more only from China than it does from Mexico.

Trade with Canada follows a similar pattern: Canada is the US’s biggest export market, with nearly $293bn worth of goods sent north of the US border in 2019, while imports totalled nearly $320bn.

Business groups, therefore, breathed a sigh of relief when the Trump administration did not announce a full closure of the border. But people are still not entirely relaxed. While co-operation between Canada and the US has remained relatively smooth, even in the age of Trump, the same cannot be said for the US and Mexico, leaving trade watchers and business lobbyists uneasy.

Trump started his premiership by threatening to build a border wall and graduated to tightening immigration rules and cutting foreign aid. He declared a state of national emergency on the Mexican border last winter after having failed to secure funding for a wall from Congress, and shortly afterwards threatened to impose tariffs as high as 25 per cent on imports from its southern neighbour if it failed to control immigration.

A worker disinfects a market in Mexico City. As coronavirus, which knows no borders, spreads, even close trading partners will have to rethink their relationships © AFP via Getty Images

The Trump administration at the time insisted that the tariffs were intended only to encourage Mexico to control the flow of migrants into the US. But on Twitter, Trump suggested US companies manufacturing in Mexico should return their factories to the US if they didn’t like the tariffs, characterising Mexico as having “taken” about a third of the US’s auto industry.

When Trump’s impulse to bring supply chains back to the US is taken together with an animosity towards Mexican immigrants and asylum seekers, it is easy to see why businesses are wary of the administration watching its southern border closely.

Edward Alden, of Washington think-tank CFR, points out that the relatively weak diplomatic co-operation between the US and Mexico could be an issue when it comes to controlling the cross-border spread of coronavirus. “I’m worried that the Mexicans are not taking this as seriously, that there’ll be an outbreak, and that this is a US administration constantly looking to close the border,” he said. 

It’s not all about goods, but people too: banning the flow of people across borders is not without cost. The Mexico frontier has been closed for a little over 72 hours, depriving several integrated border towns of workers and customers. The US Chamber of Commerce says it’s in contact with Canadian, Mexican and US officials daily while it watches the situation unfold. 

Early anecdotal reports are outlining the hit to businesses that a halt to cross-border commerce can bring. The Texas Tribune reports on the plunge in revenue facing shops in the border town of El Paso, while the San Diego Union-Tribune has written about similar problems facing small business owners in California. 

Shop owners in San Diego were given a taste of what losing Mexican customers looks like when US officials closed the nearby crossing point of San Ysidro in November in response to migrants rushing the border. Although the closure lasted only a few hours, it came on one of the busiest shopping days of the year. Local retailers estimated they lost $5.3m in sales. 

A full border closure would be far more catastrophic. But as coronavirus, which knows no borders, spreads, even close trading partners will have to rethink their relationships.

Charted waters

Across Europe, difficult negotiations are under way between governments, employers, trade unions and workers — and hard-pressed doctors who generally favour the tightest lockdown possible to reduce pressure on hospitals. One of the fiercest debates is in Sweden, where business people, scientists and newspaper columnists are arguing over whether the measures taken to counter the virus are worth the economic damage they cause. Read more

Person in the news

Who?
Michel Barnier, the EU’s chief Brexit negotiator

Why is he in the news? 
Barnier tested positive for coronavirus, becoming the first senior Brussels policymaker to confirm they have Covid-19.

The virus makes trade negotiations between the UK and EU difficult, while the overwhelming nature of the pandemic has made trade negotiations less of a priority for governments. 

Michel Barnier became the first senior Brussels policymaker to confirm they have Covid-19 © REUTERS

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Source: Economy - ft.com