Commentary:
I don’t think I have received such a flurry of phone calls or office visits by reporters, economic developers, and companies as I have had during the past couple of weeks in which President Trump has enacted a whirlwind of tariff measures. So far, he has imposed a 25 percent across-the-board tariffs against U.S.-Mexico-Canada Agreement partners Mexico and Canada, but suspended them a month until March 3. He imposed a 25 percent tariff on all steel and aluminum imports into the U.S. without any exemptions. The exemptions granted to U.S. steel importers in 2018 also were removed. He imposed 10 percent tariffs on imports from China, on top of what he had already imposed in his first term. He then ordered reciprocal tariffs against any country that has tariffs against U.S. goods.
Trump’s actions have resulted in a firestorm of reactions. China imposed tariffs ranging from 10 to 15 percent on U.S. energy products such as crude oil and liquified natural gas, and items such as farm machinery. It also has stepped up its negative rhetoric against the U.S.
In North America, Mexico has pledged to step up its efforts to intercept undocumented entries of migrants in the U.S., and illegal drugs such as fentanyl. It has sent 10,000 National Guard troops to the border. Juarez will receive between 1,500 to 1,600 troops to patrol its border with the United States. Canada has allocated $900 million for border security, including drones, surveillance equipment, and more border guards. It also created a new border czar position. Additionally, it announced that it would brand Mexican cartels as terrorist organizations.
Whether Trump’s actions have or will result in diplomatic wins is unclear. In announcing the tariffs against Mexico and Canada, Trump tied them to undocumented migrants and illegal drugs entering the U.S. Illegal entries into the U.S. are a trickle of what they were two years ago, after President Joe Biden decreed that any undocumented immigrants not entering the U.S. through a land port would not be allowed to seek amnesty. Former Mexican President Andres Manuel Lopez Obrador also increased efforts to intercept northbound migrant caravans and illegal entries into the U.S. During the current tariff discussions, Mexican President Claudia Sheinbaum was able to get the U.S. to agree to step up efforts to intercept weapons flowing from the U.S. to Mexico.
Canada’s appointment of a fentanyl czar was a surprising move given the fact that it sends so little of this drug to the U.S. Data provided by U.S. Customs and Border Protection show that in fiscal year 2024, approximately 21,148 pounds of fentanyl were captured at the U.S.-Mexico border, which was down more than 5,500 pounds compared to the year before. During 2024, only 43 pounds of fentanyl were seized at the U.S.-Canada border. This is less than one percent of the total amount of this drug seized coming into the U.S.
The steel and aluminum tariffs were ostensibly targeted towards China. However, China’s metal exports to the U.S. pale in comparison to the amount of this product that we import from our top sources: Mexico, Brazil, and Canada. So many U.S. manufacturers use steel and aluminum in their production, and now they will have to find a way to work a 25 percent increase into their operations before ultimately passing this cost on to consumers. One of my friends who manages a production plant that uses a considerable amount of steel in its operations called me to tell me that steel prices have already risen by about 20 percent, as everybody is scrambling to have access to this commodity. He told me that his steel suppliers have been inundated with orders, and they have stopped issuing quotes, and that last week he was unable to purchase any steel at all for his operation.
Earlier this month, I took part in a meeting of economic developers, real estate brokers, manufacturers, and foreign trade zone officials in downtown El Paso, Texas. The objective of the meeting was to discuss the effect of tariffs, particularly if on March 3 tariffs on Mexico and Canada are imposed. The meeting was somewhat depressing. Various people discussed how projects on the border were being postponed or suspended indefinitely because of the uncertainty of the future regarding tariffs. Some people discussed how they were in touch with companies that were postponing new hires because they didn’t know what would happen to their market share if tariffs reduced the demand for their products.
Real estate experts talked about available buildings for lease in Juarez being empty because of economic uncertainty. A discussion ensued about the difficulty of companies picking up stakes in places such as Asia and moving their operations to North America, a critical factor being the current workforce. Once a company develops the critical skills within its workforce that it needs to become efficient and competitive, it is hard to move to a new location and start from scratch in developing these skills.
A general funk seems to have descended on the border. Businesses seek stability in order to make decisions on production, expansion, and hiring. Unfortunately, instability seems to be the case at this point.
Jerry Pacheco is President of the Border Industrial Association. Jerry Pacheco's opinions are his own and do not necessarily reflect the views of KRWG Public Media or NMSU.