Auto industry: Blocking trade with Mexico would be disruptive
As President Donald Trump threatens to close the U.S.-Mexico border in an attempt to curb illegal immigration, some in the U.S. auto industry are warning the move could cause major disruptions.
Trump told reporters Friday he "could" close the U.S.-Mexican border to "all trade" as part of a larger effort to force Mexico to crack down on immigration from Central American countries.
“If they don’t stop them, we are closing the border," Trump said. "We’ll close it. And we’ll keep it closed for a long time. I’m not playing games."
The Alliance of Automobile Manufacturers, a Washington-based group that lobbies for most major automakers, pushed back Monday against any closure to trade.
"Automakers rely heavily on cross-border trade throughout the North American region," the alliance said in a statement. "In many instances, auto parts can cross the border seven to eight times before being integrated into the final assembly of a vehicle.
"We urge all parties to work together to avert a border closing that would result in significant disruptions to the North American auto industry, because ultimately increased costs hurt customers."
Some 37 percent of all auto parts imported to the U.S. come from Mexico, the country's third-largest trading partner. Cutting off U.S.-Mexican trade could create a ripple effect in the industry that wouldn't just slow or stop the delivery of vehicles — it could shut down entire plants in the United States.
"Building a vehicle becomes very difficult if you don't have all the pieces to make it work," said Kristin Dziczek, vice president of Ann Arbor-based Center for Automotive Research. "Depending on how long a closure lasts, there could be some vehicle shortages. But the more immediate effect is shutting down U.S. plants."
In Michigan alone, some five plants stand to be affected if trade between the U.S. and Mexico is brought to a standstill.
Among the most vulnerable are Fiat Chrysler Automobiles' Warren Truck and Jefferson North Assembly plants, and General Motors Co.'s Flint Truck plant, according to data provided by the Center for Automotive Research. Those three Michigan plants all source engines from plants in Mexico.
GM and Fiat Chrysler declined to comment, deferring to the Alliance for Automobile Manufacturers.
The American Automotive Policy Council, a different trade group that represents GM, Fiat Chrysler and Ford Motor Co., issued a strongly worded statement Monday.
"Any action that stops commerce at the border would be harmful to the U.S. economy, and in particular, the auto industry," said AAPC president Matt Blunt. "Access to Mexico’s market place and North American integration are critical to operations in the U.S."
The White House said Monday that up to 2,000 inspectors who screen cargo and vehicles on the Mexican border may be reassigned to help handle the influx of migrants. That could slow the movement of goods even if trade isn't cut off completely.
Senior aides defended a border closing on Sunday news shows, with acting White House chief of staff Mick Mulvaney saying it would take “something dramatic” to avoid the closure.
Trump's threats to close the border are part of the president's longer-running effort to install a wall at the U.S.-Mexico border. After declaring a national emergency at the border in February, an attempt to access wall funding voted down by Congress, the present in the last few days has said he would end aid to Guatemala, Honduras and El Salvador.
As the industry braces for a possible closure of the Mexican border, several other trade issues hang in the balance. A proposed replacement for the North American Free Trade Agreement — known as the United State-Mexico-Canada Agreement — is still up in the air. And an investigation into whether the Trump administration can levy tariffs on imported cars and parts in the name of national security still sits with the president, who has until May to act on the report.