DETROIT, Michigan–Automakers, auto parts suppliers and suppliers to many other industries face logistic nightmares as Donald Trump threatens to close the U.S. Mexican border as a measure to thwart illegal border crossings.
The threat is intended to send a message to Mexican officials that the country must do more to stem the flow of Central Americans crossing its own southern border. Mexican President Andres Manuel Lopez Obrador said Monday he would “act with prudence” regarding Trump’s threats.
The entire US auto industry would shut down within a week, say industry experts, if Trump goes through with his pledge to close the border. “Every automaker operating an auto plant in the United States depends on parts imported from Mexico,” said Kristin Dziczek, the vice president of industry, labor and economics at the Center for Automotive Research.
About 37% of all auto parts imported to the United States originate in Mexico, according to CAR. And almost all vehicles made in the U.S., and many imports as well, have Mexican parts. “You can’t sell cars with missing pieces,” she said. “You’ve got to have them all. I see the whole industry shut- down within a week of a border closing.”
The auto industry imports $60 billion worth of parts from Mexico. It also exports $32.5 billion worth of parts from US automakers and parts manufacturers to assembly plants operating in Mexico.
Matt Blunt, the president of the American Automotive Policy Council.
“Any action that stops commerce at the border would be harmful to the US economy, and in particular, the auto industry,” said Matt Blunt, President of the American Automotive Policy Council. “Access to Mexico’s marketplace and North American integration are critical to operations in the US.”
Trump has been using the threat of border crossing closure and large tariffs on imported vehicles to try and force new trade deals that would move more automakers and parts suppliers to locate factories in the U.S.
The U.S.’s higher labor costs and unpredictable growth in healthcare costs, though, have created a shift away from U.S. manufacturing for most parts makers, while U.S.-based automakers have been reducing their manufacturing footprint in the U.S.