The threat of President Donald Trump to close down the United States border with Mexico will have a severe and negative impact on the car industry. The statement was made by Kristine Dziczek, the Vice President of the Industry, Labor, and Economics at the Center of Automotive Research in Ann Arbor, Michigan. As stated by Tools Picks, Ms. Dziczek tweeted that the North American Auto Industry will be crippled in just a week’s time if the border is closed, which will cause a massive disruption in just a matter of days.
Although the President has toned down his threat a few days ago, this has not stopped experts from expressing their view on the possible effects of the closure. The President further added that he is always ready to close the border if he needs to close it.
Based on statistics, there is about $ 1.7 Billion worth of products and commodities that are passing the border and the two countries every single day.
Several business groups have been alarmed by the statement of the President while predicting that this pandemonium will happen in the manufacturing supply chains and possible economic fallout is inevitable if the U.S. pushes through with shutdown the border.
According to John G. Murphy, the Senior Vice President for International Policy of the U.S. Chamber of Commerce, the closure of the U.S. Mexico border will have a tremendous effect on the $1.7 billion worth of goods and services that are passing the border daily. He later added that the closure will also have a negative impact on nearly half a million workers, shoppers, students, and tourists that are crossing the border daily.
It is also a fact that assembling cars in the U.S. is closed to impossible without the parts that are coming from Mexico and the other countries as the industry are mutually dependent and so integrated. Most of the foreign car manufacturers are building their vehicles using U.S. parts while the vehicles that are from the U.S. are using components from other countries.
Ms. Dziczek cited an example that more than half of General Motors and Ford cars contain parts that are manufactured abroad. This means that U.S. car manufacturers cannot build a car without the parts that are coming from Mexico. She also added that, as of the present, there are only a few cars made in the U.S. that do contain car parts & radiators from Mexico while adding that there are car parts that the country does not manufacture anymore.
A border shut down will also greatly affect an issue that has been hounding the automakers for a number of years now – fewer clients and customers. In fact, the sales of the U.S. car and automotive industry have decreased by 2% in the first quarter of the year combined with the slow economic growth that will have a negative effect to the industry’s profit.
The threat of the President and the slow income turn-over this year has increased the amount of pressure in the market of the car and automobile industry.