Page 24 - THE SOUTH CHINA BUSINESS JOURNAL
P. 24
c. tODAY
How Closing the
Southern Border Would
S l am the U.S. Economy
By John G. Murphy, Senior Vice President for International Policy, US Chamber of Commerce
There’s no way to sugarcoat it: “Closing the U.S.- A range of other products — such as fresh produce —
Mexico border would inflict severe economic harm on would face immediate losses as merchandise piles up at
American families, workers, farmers, and manufacturers,” the border. Some of this cargo would have to be written off
as Neil Bradley, the Chamber’s executive vice president as a total loss.
and chief policy officer told the press earlier this week.
How would it hit the U.S. auto sector?
The U.S. Chamber of Commerce shares the
administration’s concerns over the influx of migrants Autos and auto parts make up about one-quarter of
seeking to enter our country along our southern border. U.S.-Mexico trade, so this industry is at the heart of
We are firmly committed to new measures to secure the these concerns.
border and fix our broken immigration system.
U.S. auto plants would be expected to close one day
However, we are firmly opposed to closing the border. for every day the border is closed. Due to the nature of
Let’s look at the facts. each plant’s supply chain and the volume of parts they
have stockpiled, some plants would likely shut down
How much trade goes across the U.S.- sooner than others; but in the end, each day the border
Mexico border? is closed equates to a one-day plant shutdown. The fixed
costs of operating these plants would be losses that
U.S. goods and services trade with Mexico reached $678 cannot be recovered.
billion last year or $1.85 billion per day, according to the
U.S. Department of Commerce. According to the Center for Automotive Research (CAR),
every hour a U.S. auto plant is shutdown would cost about
An estimated $502 billion in goods — about $1.4 billion $1.2 million – $1.3 million. Taking into account the number
a day — crossed the border via trucks and trains last year, of hours an auto assembly plant is normally run (20 hours
according to the Commerce Department. per day) and the number of U.S. auto assembly plant
model lines (more than 50), the overall cost of a total U.S.
Can we estimate the cost of a border auto assembly shutdown is about $1.3 billion a day.
closure to the economy?
Given that the auto assembly portion of the U.S. auto
It would likely be in the tens of billions of dollars per day industry’s is only a fraction of the total industry, the ripple
— certainly much more than the $1.4 billion in daily U.S.- effect on the rest of the auto industry would be at least
Mexico merchandise trade. 4-times that of the assembly plants – or about $4 billion
per day. All told, it adds up to at least $5.3 billion a day in
Why would this be the case? Today’s lean manufacturers additional costs to the entire U.S. auto industry. And that’s
keep costs down by using just-in-time delivery for many just one industry.
parts and components. In this context, the delay of a few
million dollars’ worth of inputs can force a shutdown of Many of the 48 ports of entry on the U.S.-Mexico
an assembly plant or other major manufacturing facility border are now experiencing substantial slowdowns
whose total output is orders of magnitude greater in dollar as Customs and Border Protection staff have been
terms than the goods held up at the border. reassigned and as industry has hurried to move goods
across the border ahead of a threatened closure. These
21 AmCham South China
How Closing the
Southern Border Would
S l am the U.S. Economy
By John G. Murphy, Senior Vice President for International Policy, US Chamber of Commerce
There’s no way to sugarcoat it: “Closing the U.S.- A range of other products — such as fresh produce —
Mexico border would inflict severe economic harm on would face immediate losses as merchandise piles up at
American families, workers, farmers, and manufacturers,” the border. Some of this cargo would have to be written off
as Neil Bradley, the Chamber’s executive vice president as a total loss.
and chief policy officer told the press earlier this week.
How would it hit the U.S. auto sector?
The U.S. Chamber of Commerce shares the
administration’s concerns over the influx of migrants Autos and auto parts make up about one-quarter of
seeking to enter our country along our southern border. U.S.-Mexico trade, so this industry is at the heart of
We are firmly committed to new measures to secure the these concerns.
border and fix our broken immigration system.
U.S. auto plants would be expected to close one day
However, we are firmly opposed to closing the border. for every day the border is closed. Due to the nature of
Let’s look at the facts. each plant’s supply chain and the volume of parts they
have stockpiled, some plants would likely shut down
How much trade goes across the U.S.- sooner than others; but in the end, each day the border
Mexico border? is closed equates to a one-day plant shutdown. The fixed
costs of operating these plants would be losses that
U.S. goods and services trade with Mexico reached $678 cannot be recovered.
billion last year or $1.85 billion per day, according to the
U.S. Department of Commerce. According to the Center for Automotive Research (CAR),
every hour a U.S. auto plant is shutdown would cost about
An estimated $502 billion in goods — about $1.4 billion $1.2 million – $1.3 million. Taking into account the number
a day — crossed the border via trucks and trains last year, of hours an auto assembly plant is normally run (20 hours
according to the Commerce Department. per day) and the number of U.S. auto assembly plant
model lines (more than 50), the overall cost of a total U.S.
Can we estimate the cost of a border auto assembly shutdown is about $1.3 billion a day.
closure to the economy?
Given that the auto assembly portion of the U.S. auto
It would likely be in the tens of billions of dollars per day industry’s is only a fraction of the total industry, the ripple
— certainly much more than the $1.4 billion in daily U.S.- effect on the rest of the auto industry would be at least
Mexico merchandise trade. 4-times that of the assembly plants – or about $4 billion
per day. All told, it adds up to at least $5.3 billion a day in
Why would this be the case? Today’s lean manufacturers additional costs to the entire U.S. auto industry. And that’s
keep costs down by using just-in-time delivery for many just one industry.
parts and components. In this context, the delay of a few
million dollars’ worth of inputs can force a shutdown of Many of the 48 ports of entry on the U.S.-Mexico
an assembly plant or other major manufacturing facility border are now experiencing substantial slowdowns
whose total output is orders of magnitude greater in dollar as Customs and Border Protection staff have been
terms than the goods held up at the border. reassigned and as industry has hurried to move goods
across the border ahead of a threatened closure. These
21 AmCham South China
