EL PASO, Texas — President Trump’s threatened 5% tariff on Mexican products coming across the border is having a “chilling” effect” this morning on maquiladora operators and their suppliers, say El Paso area business leaders.
“It is taking a pistol and shooting ourselves in the foot,” said Jerry Pacheco, president and CEO of the Santa Teresa-based Border Industrial Association.
That’s because American companies have their products assembled in Mexico and returned to the United States through the ports of entry. The tariff, business leaders say, would hurt not only Mexico, but also American companies and their U.S.-based supply chain.
“We are going to get affected on this side of the border. It’s not as simple to say, ‘I’m going to impose a tariff on Mexican products.’ Those Mexican products often have between 40% and 90% American content,” Pacheco said.
On Thursday night, president Trump tweeted that he would impose the 5% tariff on Mexican goods coming across the border beginning on June 10 unless Mexico helps stem the tide of illegal immigration into the United States. The tariff would increase each month until it reaches 25% in October.
Pacheco said linking trade to immigration doesn’t make economic sense.
“We at the border certainly don’t appreciate being put in the front lines of this trade war, especially for immigration issues. Trade and immigration are two completely separate issues, yet we are dragged into this whole thing as kind of a ransom, and that is highly counterproductive,” he said.
Jon Barela, chief executive officer of El Paso’s Border Trade Alliance, said the announcement has had a “chilling effect” today not only in the region’s manufacturing sector but also among suppliers and retailers.
“It creates uncertainty for investment, jobs and economic growth,” he said. “We have received numerous calls from businesses on both sides of the border… they are very concerned about the tariffs.”
El Paso-Juarez-Dona Ana County is the 4th largest manufacturing region in North America, generating 300,000 direct and indirect jobs, both business leaders said.
As it is, due to the recent influx of immigrants to the region, U.S. Customs and Border Protection reassigned dozens of inspectors from international ports-of-entry to detention and processing centers, provoking long lines of trucks bringing manufactured goods back into the United States.
“This has caused a shortage of inspectors that clear and inspect commercial shipments; it has slowed down the process of moving commerce cross-border. That’s challenge enough. Now you slap another 5% on top of that making us even more inefficient,” Pacheco said.
He hopes that the president is just trying to goad Mexican officials into cooperating on the immigration front, otherwise, American industry will have to absorb much of the cost of tariffs intended not for them, but for Mexico.
“It’s clear that the advisors to the president or the president himself don’t understand how trade and production-sharing works and why it is so necessary to have a cooperative spirit between Mexico and the United States,” he said.