The economic impact of a wall along the US border is considered by conservatives to have a positive economic impact. The idea being that stemming the flow of undocumented people will reduce the tax burden of US citizens. This is a great oversimplification and the reality appears to be counterintuitive. Consider this article from the Business Insider.
Business on the US-Mexico border is already feeling the fallout from Trump’s squabble with Mexico
from the Business Insider, January 28, 2017
During Donald Trump’s presidential campaign, the Mexican peso often tracked his poll numbers, rising when he fell and falling when he surged.
And, in keeping with that trend, in the days since he’s taken office the peso has mirrored the seeming deterioration of US-Mexican relations.
The currency’s swings haven’t taken place in a vacuum, however.
Commerce on the frontier, where businesses and consumers often stretch across the border, has started to feel the uncertainty of US-Mexico relations in the Donald Trump era.
“There are businesses that depend on the ways that the border is porous, and there are businesses that depend on the ways that the border is solid. The former are mostly in retail,” Patrick Iber, an assistant professor of history at the University of Texas at El Paso, told Business Insider.
“If you look at a map of El Paso, there is a neighborhood called Chihuahuita right across the main bridge crossing between here and Juárez,” in Mexico, Iber said. “And lots of relatively poor people [from Mexico] … shop in the downscale wholesale markets that line the streets there.”
The peso’s struggles, rising nearly 13% against the dollar since the beginning of November, have negatively affected the purchasing power of Mexicans shopping in the US, in turn putting a chill on outlets on the US side of the border that cater to them.
“These are the places that I have heard are failing,” Iber said of the markets in Chihuahuita, “because they depend on the small amounts of disposal income among relatively poor Mexican shoppers.”
But the Mexican consumption in El Paso and Texas more broadly is not limited to people shopping at stalls within walking distance of the border.
“The shoppers who come over from Mexico are very important, especially for taxing entities,” David Stout, the El Paso County commissioner from Precinct 2, told The Morning News in December. “We rely heavily on the sales tax revenue we generate.”
The Rio Grande Valley, east of El Paso at the the southern tip of Texas, has some of the highest-volume retail space in the US because of visitors coming from Mexico, according to The Dallas Morning News.
While wealthier Mexican shoppers have, for the time being, been undeterred by the peso’s fall against the dollar (“They don’t even look at the prices,” an El Paso sales associate told The Morning News), the weaker exchange rate “has stopped some budget-conscious Mexican shoppers from crossing as often to buy in Texas,” according to The Morning News.
Poor purchasing power isn’t the only recent development making Mexicans reluctant to cross the border. Trump’s hardline position on deportation and border enforcement has sent a chill throughout the immigrant community in the US, particularly in Texas.
“Even at UTEP, something like 6% of our student body crosses the Juárez bridge daily to attend school,” Iber said. With Trump’s move toward a more aggressive deportation policy that, according to one immigration lawyer, gives the administration “carte blanche” to round up immigrants in the US, “People are naturally, and rightly worried,” Iber added.
“One graduate student saw an El Paso lawyer tweet that even if you have a legal visa, don’t cross the border after 6pm because border patrol agents were confiscating visas,” Iber told Business Insider.
“I can’t confirm that, but people hear those kinds of rumors (which may well be true), and it threatens the legal crossings that take place by the thousands every day. Families with relatives on both sides will be afraid to visit each other.”
Since Trump’s election, business leaders in both the US and Mexico have turned their attention to defending open cross-border trade, looking to tout the benefits both countries have gleaned from it.
“You have powerful people from Mexico talking, drinking, having dinner with very powerful Texas people,” James Hollifield, a professor at Southern Methodist University and director the school’s Tower Center for Political Studies, told The Morning News in December.
“These guys and gals have known each other for years … They will push this agenda,” Hollifield said. “You will see a powerful binational coalition forming between these two countries.”
Indeed, Mexico is the US’s second-largest export market and third-largest overall trade partner. In 2015, daily bilateral trade was worth $1.46 billion.
Texas’ imports from Mexico were worth more than $84 billion in 2015, more than double the value of imports from the state’s second-biggest source, China, and more than five times the value of Texas’ imports from Canada.
Based on the value of 2015’s imports, Texas would pay $16.8 billion more for the same goods and services if the 20% import tariff floated by the Trump administration this week were applied.
The administration quickly walked that proposal back, saying it was just an example of a plan to fund construction of Trump’s vaunted border wall, but many were quick to note the deleterious impact it would have on consumers in the US.
“A 20% tax on Mex.imports to pay 4 the #BorderWall wud hav the same impact as a category 5 hurricane on the [Rio Grande Valley]~catastrophic&hard 2 overcome,” tweeted Reuben O. Villarreal, a Republican and former mayor of Rio Grande City, which is on the Texas-Mexico border.
“We don’t produce vegetables here in the states” in the winter, said Alfredo Duarte, president and cofounder of Taxco Produce Inc., which is based in Dallas.
“We have to import vegetables,” Duarte added. “If people are still wanting to eat guacamole on Super Bowl day, we’ll just go back to the time when we were paying $80 a case for avocados from California about 15 years ago.”
A case, which can contain 30 to 60 avocados, currently costs about $40, according to The Morning News.
“Texas’ working families and our economy depend on a strong relationship with Mexico,” said Texas Democratic Party executive director Crystal Perkins. “Minority President Donald Trump’s 20-percent tax will kill Texas jobs, raise the price of goods for Texas families, and slaughter Texas’ relationship with its largest trading partner.”
Trump’s ultimate trade policy, and what the final form his border wall will be, are still up in the air. But his aggressive posture toward the intimate relationships — both commercial and familial — that have formed along the US-Mexico border has already been felt.
“I don’t know that we’ve ever felt safe again,” Francisca Jimenez, a cleaning woman in Ciudad Juarez, told The Morning News in December. “There’s also more uncertainty for Mexicans here in and in the United States with the arrival of el señor Trump.”