Border Wall and the U.S. Economy

One of current President Donald Trump’s biggest presidential campaign promises was that a wall would be built on the border between the United States and Mexico. President Trump is demanding that the United States Congress find a way to put funds in the budget for the wall to be built. One of the questions that seem to be continually circulating is whether or not the border wall will help or hurt the U.S. economy. However, there are those that are of the belief that building this wall could cause problems for “American businesses, America’s taxpayers,” as well as U.S. jobs (Chopra, Sehgal, & Avgerinos, 2017).

Some fear that a trade war will be one of the outcomes of a border wall being placed between the United States and Mexico. According to the Investopedia website a trade war is define as “A trade war is a side effect of protectionism that occurs when one country [Country A] raises tariffs on another country’s [Country B] imports in retaliation for Country B raising tariffs on Country A’s imports” (Chen, 2018). A tariff is defined as “a tax imposed on imported goods and services” (Chen, 2018). Some trade wars begin when a country tries to create jobs and protect the economy (Amadeo, 2018). As a trade war gets worse, it can cause international trade to decrease (Amadeo, 2019).

A trade war with Mexico could be difficult on the U.S. economy because Mexico is “the third-largest trading partner” with over two billion in export business from the U.S. to Mexico each year (Chopra et al., 2017). Building the border wall may antagonize Mexico and may lead to Mexico boycotting some U.S. imports (Chopra et al., 2017). An example of this is the corn exports from the U.S., which Mexico buys almost 30% of. If Mexico refuses to continue to purchase the corn from the U.S., this could negatively impact U.S. farmers (Chopra et al., 2017). While in the short term a trade war may not be as bad it sounds, but in the long run a trade war can be the cause of an economic depression.

Building the border wall between the U.S. and Mexico is set to cost between $8 billion to upwards of $12 billion (Snyder, Chopra, & Gingrich, 2017). Since Mexico has already stated that they will not pay for any type of wall to be built there are two options left for President Trump. The first choice would be to leverage the Patriot Act and force Mexico to pay to build the wall and the second choice would be for the U.S. taxpayers to pay for it (Chopra et al., 2017). According to the Pew Research Center, over 60% of Americans oppose building a border wall, and many believe that the U.S. would end up paying for the wall to be built as the information on table 1 shows (Suls, 2017).  The U.S. federal government shut down just over two weeks ago when a spending bill could not be agreed upon that included funding for the border between the U.S. and Mexico (Tuttle, 2019). It has been estimated that “the economic costs of the government shutdown may already exceed the $5 billion President Donald Trump is demanding” (Suls, 2017).

This border wall between the U.S. and Mexico may effects workers, tourists, and student who cross the border daily (Ewing, 2016). In 2010, there were approximately 13 million Mexicans that travelled to the U.S. and spent over $8 billion (Ewing, 2016). This money would no longer be spent in the U.S. Many of the jobs related to trade with Mexico, which are estimated to be over 20% of all U.S. jobs, would be severely impacted, if not completely done away with completely (Ewing, 2016).

While it is still unclear just what economic impact the border wall between the U.S. and Mexico will have, many believe that the negatives will far out way any positives. Both immigration and the border wall have bee, and will continue to be, a hot button issue (Salay, 2017). While the wall is being built there may be an up rise in jobs associated with the wall, these jobs are only temporary and will disappear when the wall is completed. So far, the U.S. government has not come to any type of agreement on what funds are to be used to build the wall and who will end up paying for it.

References

  1. Amadeo, K. (2019, January 2). Why Trade Wars Are Bad and Nobody Wins. Retrieved January 8, 2019, from https://www.thebalance.com/trade-wars-definition-how-it-affects-you-4159973.
  2. Chen, J. (2018, December 14). What is a Trade War? Retrieved January 8, 2019, from https://www.investopedia.com/terms/t/trade-war.asp.
  3. Chopra, D., Sehgal, K., & Avgerinos, P. (2017, August 10). Trump’s border wall with Mexico will kill U.S. jobs, business, environment: Chopra. Retrieved January 8, 2019, from https://www.marketwatch.com/story/why-deepak-chopra-opposes-trumps-mexican-border-wall-2017-08-10.
  4. Ewing, W. (2017, January 6). How a Border Wall Would Hurt the U.S. Economy. Retrieved January 2, 2019, from http://immigrationimpact.com/2016/03/17/economic-cost-of-border-wall/.
  5. Salay, M. (2017, May 1). Would a Mexican-U.S. border wall help or hurt the economy? Retrieved from https://www.marketplace.org/2017/05/01/economy/would-mexican-us-border-wall-help-hurt-economy.
  6. Snyder, R., Chopra, R., & Gingrich, B. (2017, April 21). Economic Implications of Building a Wall. Retrieved January 8, 2019, from https://publicpolicy.wharton.upenn.edu/live/news/1818-economic-implications-of-building-a-wall/for-students/blog/news.php.
  7. Suls, R. (2017, February 24). Most Americans continue to oppose U.S. border wall. Retrieved January 10, 2019, from http://www.pewresearch.org/fact-tank/2017/02/24/most-americans-continue-to-oppose-u-s-border-wall-doubt-mexico-would-pay-for-it/.
  8. Tuttle, B. (2019, January 04). Government Shutdown Costs: Economic Effects of Trump Wall | Money. Retrieved January 5, 2019, from http://time.com/money/5494004/government-shutdown-costs-trump-border-wall/.

 

 

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