It's not just avocados. Trump's border shutdown would hammer the economy

  • President Trump’s proposed closure of the Southern border with Mexico could have devastating consequences for the US economy.
  • Beyond rocketing avocado prices, the possibility of border closure would lead to billions of dollars in lost trade and could even swing the US into recession.
  • Trump has acknowledged the potential economic impact but noted that “security is more important.”

Donald Trump’s threat to close the US-Mexico border has led to White House officials scrambling to prevent the move, with trade experts warning that it would impact much more than millennial brunch.

Avocado prices have spiked amid fears that Trump might make good on his threat, while produce could start disappearing from shelves within days within days. Some $US558 billion of trade travelled, mostly by truck, between the US and Mexico in 2017.

“Closing the US-Mexico border would inflict severe economic harm on American families, workers, farmers, and manufacturers across the United States, warned to the US Chamber of Commerce this week. “US trade with Mexico exceeds $US1.7 billion daily, and nearly half a million people legally cross the southern border every day as workers, students, shoppers, and tourists.”

Recession is one possible outcome of a border closure, according to Forbes. The damage to supply chains and local economies would provoke wider consequences related to spending and US growth in the event of an unprecedented closure of the Southern border. Mexico is the US’s third largest trade partner.

It’s expected that the entire US auto industry could close in just a week if the border closes because some 16% of parts for American produced vehicles come from Mexico, according to leading economist Kristin Dziczek, the vice president of industry, labour and economics at the Center for Automotive Research, cited in CNN.

Acting chief of staff Mick Mulvaney indicated Tuesday that President Trump would close the border over perceived security issues related to migration “unless something dramatic” happened. This led to key staff scrambling to advise Trump that closing the border would be a bad idea, both economically and politically, according to CNN.

The President previously claimed there was a “very good likelihood” that the border would be closed this week with a decision potentially set to be made on Friday, as reported by CNN, citing senior White House officials. Trump has warned that the current immigration system is “maxed out,” according to the Wall Street Journal, having acknowledged that the economy is important but that “security is more important,” according to Axios.

Senior Republicans and business leaders, particularly in Texas, have been vocal on their expectation of the devastation any shutdown would cause, but for now it’s another case of wait and see for anxious border communities and the wider US economy.

Sealing the entire border between the United States and Mexico could be “an economic impossibility,” according to Duncan Wood, director of the Wilson Center’s Mexico Institute, per CBS.

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