If Trump Shuts Down US-Mexico Trade, Ohio Would Take Hit
President Trump is threatening to close the U.S.-Mexico border in response to a recent surge of people crossing illegally. In speaking to reporters about the proposal this past weekend, he said a shutdown could include “all trade.”
Such a move would have a significant impact on Ohio, which has Mexico as its second-largest trading partner after Canada.
In 2018, exports from Ohio to Mexico totaled $6.9 billion, or 12.6 percent of the state’s exports, according to the Ohio Development Services Agency. While roughly half the value of those exported goods came from industrial products—such as machines, plastics, and auto parts—agricultural goods were big too.
“Corn is one of the major ones,” said Joe Cornely, a spokesman for Ohio Farm Bureau. “A lot of wheat from the United States goes into Mexico, and a lot of pork.” He says a complete halt of trade would likely sink prices that farmers could get for those commodities.
“If we can’t sell any corn to anyone in Mexico, then the price will drop quickly,” Cornely said.
The pinch would also likely be felt by U.S. consumers in the form of higher prices on Mexican agricultural products. For instance, about 49.5 percent of the vegetables imported by the U.S. in 2018, as well as 40 percent of imported fruits, came from Mexico, according to data from the U.S. Department of Agriculture's Foreign Agricultural Service.
“It just demonstrates someone doesn’t understand the nature of global business,” said Ohio State University Professor Thomas Goldsby, referring to the president. A freeze in the movement of goods across the border would be “disastrous” for companies in Ohio with cross-border supply chains, he said.
The value of exports from Ohio to Mexico has more than doubled in the past decade. [Ohio Exports Report: 2018 / Ohio Development Services Agency]
The president told reporters over the weekend that a shutdown would put pressure on Congress and the Mexican government to do more to stop the recent flow of migrants, which has overwhelmed Customs and Border Protection facilities in cities such as El Paso. Trump also expressed intent to cut U.S. aid to El Salvador, Honduras, and Guatemala—countries from which many of the migrants are coming in order to flee gang violence and poverty.
“Mexico could stop it so easily,” Trump said. “If they don’t stop them, we’re closing the border.” But the move would likely cause collateral damage to the U.S. economy, Goldsby said.
“Our supply chains are globally interconnected,” he said. “And so, major trading partner or minor, you can’t take that kind of strong position in the near term and not expect it not to have a dramatic effect.”
Goldsby pointed out that Trump using an economic threat against Mexico seems to work at cross-purposes with another White House goal—to get Congress to ratify the U.S.-Mexico-Canada trade deal.
But, he added, what the president says and what he does are often two different things.
Copyright 2019 WCPN