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Business

A Trade War With Mexico Could Risk Billions For Local Economy

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Rebecca Blackwell
/
AP
Vendor Luis Alberto Bautista arranges strawberries as he lays out fresh produce in his vegetable stand in Mercado Medellin in Mexico City on Thursday. Mexican berries, vegetables and beef born south of the border abound at American supermarkets.

A trade war with Mexico is not only a national issue. It could also disrupt New York and Connecticut’s economies.

That is, if President Trump fulfills his campaign promise to have Mexico pay for a border wall with a 20 percent tariff on imports. Trump says he plans to speed up talks this month to overhaul Mexican trade agreements under NAFTA.

VOXX International imports leather from Mexico to make headrests for American car companies. Pat Moffett, VOXX’s vice president, says, “Our customers don’t want to hear, ‘You got a 20 percent more issue, now that has been raised on your product coming from Mexico, that’s not my problem.’ I have this price and I need to maintain it. So then the loss goes to the importer.”

Moffett sometimes has to ship goods back over the border to Mexico and Canada, so a tariff could cost VOXX a fortune. “Let’s say it’s a $100 a roll, which you know is not the case, but $100 a roll you are going to have to pay another 20 percent. Your entered value under NAFTA would be 100; under the new [policy] would be $120.”

The U.S. Department of Commerce says Mexico is New York’s eighth largest trading partner and imports almost $4 billion worth of goods. Connecticut trades goods worth about $1 billion and Long Island another $300,000.

Michael Driscoll, with Adelphi University’s business school, says a trade war between Mexico and the U.S. will raise prices for consumers.

“You know the simple laws of supply and demand: as prices are going to go up, people are going to buy less of those products.”

Driscoll says a tariff will force companies to trade elsewhere...if they can find a willing partner.

“The U.S. is by far the most important economy in the world, but we can’t expect that we are going to do these things to other countries and that they’re not going to retaliate.”

Moffett, who also founded the Long Island Import Export Association, says he doesn’t think Congress would ever approve Trump’s tariff.

“I think this is saber rattling. I am not sure he can do this on his own, I am not familiar with that part of it. But this would be an outrageous thing to do.”

Trump says he wants to begin the renegotiation of NAFTA as soon as possible.