Amid pressure from business groups in several industries and top lawmakers in his own party, President Donald Trump this week walked back his threat to close the U.S.-Mexico border.
The National Retail Federation was among them. "We are relieved the administration has listened to the concerns of lawmakers and the business community and backed away from threats to close the US-Mexico border," NRF SVP of Government Relations David French said in a statement emailed to Retail Dive on Friday. "Now is the time for Congress and the administration to act on bipartisan solutions for border security and immigration reform."
The group Thursday had sent a letter noting "U.S. trade with Mexico exceeds $1.7 billion each day" to Secretary of the Treasury Steven Mnuchin, Secretary of Commerce Wilbur Ross, Secretary of Homeland Security Kirstjen Nielsen, United States Trade Representative Robert Lighthizer, White House National Economic Council Director Larry Kudlow and Council of Economic Advisers Chairman Kevin Hassett, and warned, "there is no way to close the U.S-Mexico border without inflicting serious damage to the American economy." NRF President and CEO Matthew Shay also wrote that "Closing the border for any length of time would result in significant supply chain disruptions for U.S. retailers."
Industry leaders and political lawmakers of all stripes made it clear this week that there's little appetite for the border closure solution Trump talked about most of the week, and the president changed his tune more than once during that time.
"These disruptions would reverberate throughout the supply chain, impacting everyone from truckers to warehouse workers whose jobs depend on the two-way trade with Mexico," the NRF letter also reads. "The end result would be job losses, factory shutdowns, increased consumer costs and reduced product availability across the country. Our members, both large and small, that operate along the southern border would see a significant reduction in daily sales from a border shutdown. Thousands of people who rely on legal border crossings every day would no longer be able to get to work or shop in nearby stores."
The administration appears to have heeded such caution. After threatening to shut down the official checkpoints along the border, the president, speaking to reporters on Thursday, changed his plan to giving Mexico a year to end illegal drug transport into the U.S. and shortly after said he would impose tariffs on cars made in Mexico before making the drastic move.
"I don‘t think we‘ll ever have to close the border," he told reporters, according to several news reports, including Politico.
On Friday, French indicated that retailers expect more from the administration. "Washington must also ensure Customs and Border Protection officials have the resources they need as slowdowns at border crossings are becoming a serious problem and disrupting the flow of commerce," he said.
Also on Friday, Trump continued to float the idea of auto tariffs, but that would be detrimental to American auto workers, according to a note Wells Fargo Global Economist Jay Bryson emailed to Retail Dive. "Realistically, however, a closure of the southern border likely would not be disruptive enough to cause a recession in the U.S. But the costs to growth could start to add up if the border were to remain closed for an extended period of time," he warned.
The current administration has proved to be a mixed bag for retailers. Several have noted the benefit of Republican tax reform in earnings reports over the last year or so, but the sector has also been buffeted by various trade moves and rhetoric coming from the White House and by a government shutdown that has shaken consumer confidence and delayed government economic reports affecting the industry. Several retailers last year warned that tariffs on Chinese imports, which also have been delayed, could mean higher prices for consumers that could, in turn, hurt sales.