Delays at U.S.-Mexico border crossing hits autos, trucks still lining up

border slowdown

CIUDAD JUAREZ/MEXICO CITY -- Long delays at the U.S.-Mexico border crossing for goods destined for American plants and consumers are hitting the U.S. auto industry, and the gridlock reduced by half the number of northbound trucks that crossed the entry point last week

Washington's decision to move some 750 agents from commercial to immigration duties to handle a surge in families seeking asylum in the United States has triggered the delays at crucial ports on a border that handles $1.7 billion in daily trade.

"The situation in Ciudad Juarez is very serious because these auto parts go to plants in the United States and obviously they put at risk the operation in the United States," Eduardo Solis, the president of the Mexican Auto Industry Association (AMIA), said on Monday.

The North American auto industry is highly integrated and many car parts cross the border several times before they are finally installed on a vehicle.

Seventeen 17 hours before the crossing to El Paso even opened on Monday morning, trucks were already lining up in Ciudad Juarez to avoid the fate of some 7,500 trailers that failed to cross last week, said Manuel Sotelo, vice president at the Mexican National Chamber of Freight Transport's north division.

That is roughly half the number of trucks per week that usually cross there, carrying everything from car and plane parts to refrigerators, washing machines, TVs, cellphones and computers.

"This is not normal. We had never seen this before in Ciudad Juarez," said Sotelo.

Despite elevated costs, some Mexican exporters are turning to air freight to avoid the mile-long lines at the border.

"We're using charter (planes) which cost between $35,000 and $100,000 depending on the volume and merchandise," said Pedro Chavira, who heads the manufacturing industry chamber INDEX in Ciudad Juarez.

Air freight is typically a last resort used by automakers and suppliers to get parts to an assembly plant for just-in-time delivery.

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Suppliers and buyers clash over tomato trade policy change

tomatoes from Mexico

The debate surrounding this move to withdraw from the 6-year-old agreement with Mexico demonstrates that President Trump's "Buy American" ethos is not a simple concept in today's economy.

Supporters of withdrawal are mainly suppliers of tomatoes and say it didn't serve its purpose of protecting American farmers. Supporters include Florida tomato growers along with Sen. Marco Rubio and nearly 50 other lawmakers largely representing Southern and Eastern states along with Michigan, California and Puerto Rico. In a letter to the Secretary of Commerce requesting termination of the agreement, these parties wrote Mexico's market share of tomatoes sold in the U.S. has gone from one third to half of the market.

"The U.S. tomato industry has been the canary in the coal mine for domestic fruit and vegetable production over the last three decades. Immediately terminating the suspension agreement will reinvigorate the anti-dumping investigation on fresh tomatoes from Mexico and send the message that the U.S. will ensure vigilant enforcement of our existing trade laws and trade agreements," said Rubio in a statement.

But other U.S. constituencies, mostly on the buy-side of industry, are less supportive of the tack by the Commerce Department. The Border Trade Alliance called the decision "a move that attempts to tilt trade policy in favor of parochial Florida farmer interests, but jeopardizes the health of the national agriculture industry."

The Fresh Produce Association of the Americas is also against withdrawing, stating: "Even a 5% reduction in supplies of Mexican tomatoes would result in consumers paying up to 25 cents more per pound at supermarkets, or up to $790 million more per year for tomatoes."

There is still a chance that a resolution may be reached in the intervening 90 days, but the timing is particularly demonstrative of how no trade deal, no matter how specific, happens in a vacuum. With the USMCA still not ratified by the U.S., Mexico or Canada, these smaller fights may have an impact far beyond farms and grocery stores.

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