Americas Mexico Border Wall along the US-Mexico border.

Published on February 8th, 2017 | by Lidija Bojčić

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The true cost of Mexico border wall

The new president of the United States Donald Trump began immediately make good on campaign promises of his campaign, and especially his promise to raise a wall along the border of his country with Mexico prevent further illegal immigration from that country and other Latin American countries. As one of his first acts, Trump has signed an executive order to build a wall along the US border in Mexico length of  3100 kilometers and demanded of the Mexican government to pay for it. These announcements have caused great consternation in Mexico, but also in other Latin American countries. Mexican President refused his country to pay for the construction of the border wall, because it is neither politically nor economically Mexican interest.

This is the result led to the cancellation of the first working visit of Mexican President Enrique Pena Nieto in the United States. Also, canceled the meeting of the Mexican Foreign Minister Luis Videgara and US Secretary for Homeland Security John Kelly. The meeting was to be the subject of border management and immigration issues.

Trump Administration has reported that it is planning a series of punitive measures against Mexico, if it will not pay the cost of construction of the border wall. It will most likely achieved through increased pressure on Mexico. The President Trump ordered to collect data on bilateral and multilateral development assistance, economic aid, humanitarian aid and military assistance to Mexico in the last five years. US will put pressure on these areas to meet US requirements for the construction of the wall with Mexico.

President Trump threatened to raise 20 percent of tariffs on Mexican goods exported to the US and it will be allocated for the construction of the wall. The company Ford has given up investing in a car factory in Mexico worth $ 1.6 billion. Before Trump choice for US president, Ford is intended to move the production of small cars Ford Focus from Michigan to Mexico. Similar pressure has General Motors, also.

The tariff measures raising will have an effect on other countries and not just to Mexico. Trump proposes to tax remittances Mexicans and US citizens of Mexican origin in the United States to Mexico. As a countermeasure, Mexican Economy Minister said his government will respond immediately to such an attempt by the US administration. Mexican President has made it clear that Trump will not tolerate actions that the United States plans to the border wall and trade tax on Mexican goods.

The construction of the border wall between the United States and Mexico signed the former US President George Bush in the document Secure Fence Act in 2000, after the approval of Congres. The Act is determined to build a fence along the US-Mexico border in the length of 700 of the total 1,900 mile-long border. It has raised a total of exactly 652 miles a wall consisting of walls, fences and other obstacles. The existing wall is in operation, and it is strongest in areas where large populations of concentrated population, San Diego on the US side and Tijuana on the Mexican side. Wall passes through the desolate desert regions and in many parts as possible to cross on foot across the border. But in some areas it is very difficult to cross, and it has a protective function. The boundary wall has cost $ 7 billion for its further upgrade it will need substantial financial resources and effort.

Trump claims that the construction of the wall would cost $ 8 billion, but a realistic assessment that would cost around $ 15-25 billion. In addition to this very costly, the wall construction  is important because other political and socio-economic consequences for American citizens in the southern border states such as California, Arizona, New Mexico and Texas and in their relations with Mexico. There are dire warnings of some politicians from these bordering states for the proposed construction of the boundary wall and the implications for trade relations with Mexico, as well as the economic relations the United States as a whole.

Government of Latin American countries are very sharply reacted to Trump’s claims about the border wall and increase tariffs on trade goods from Latin America. Its view they expressed at the meeting of the Community of Latin American and Caribbean States (CELAC) in Punta Cana in the Dominican Republic January 27, 2017. At the meeting, attended by ten heads of state and 33 ministers of foreign affairs and they are completed actions Trump’s administration is excessive. Furthermore, CELAC group will respond to any aggressive policy of persecution of migrants from the United States and raising trade tariffs. And the policy they are called “wall of shame“.

Although its decision and attitude Trump announced in his pre-election and post-election statements, it is a surprise of his haste in implementing these controversial decision shortly after he took office. It seems that he intends to demonstrate its resolute position on difficult issues such as setting the boundary wall on the border with Mexico and reduce the deficit in US trade. This is all in order to consolidate its position on the home’s front. But now the result is not what he wants. Such a policy leads to political turbulence in the US, but also outside the country. Currently, I can not estimate the economic relations in the hemisphere, but it also undermines the existing North American Free Trade Agreement (NAFTA), which was formed in 1994. It seems, Trump is very short-sighted and does not want to see the effects of public policy on the economy and international influence of his country in the long run, although he has an overview of the events to decide on policy in transaction terms.

Mexico is the third import-export trading partner with the United States. Mexico-US trade is higher than the $ 583 billion (2015). US direct investment in Mexico are $ 107 billion. Increased tariffs on Mexican goods will have consequences for American consumers. In particular, it is important for American products that are processed in Mexico and then the goods are returned to the United States. It will have a double tax.

Any reduction in Mexican exports to the United States and problems in the supply chain will have a major negative impact on American industry and its labor market. Affected will be the sector of industrial goods, automobiles and agriculture. For these reasons, Mexico will retaliate by imposing countervailing duties on US exports and probably it will raise tariffs on agricultural products from the US: corn, milk products, meat. This will affect production in Mexico and farmers in the United States. Mexico will limit profits on US investments.

All of these possible actions could produce an economic loss rather than a gain for the United States, primarily the loss of international reputation and credibility.

 

 

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