Mexico trade hits a wall - Tucson News Now

Mexico trade hits a wall

(Source: Tucson News Now) (Source: Tucson News Now)
TUCSON, AZ (Tucson News Now) -

The most recent report of the Arizona-Mexico Economic Indicators published by the Ellen School of Business at the University of Arizona shows exports dropped 20 percent in January and 10 percent for the final quarter of 2016.

The reasons for the drop vary but it's likely a combination of factors.

"The dollar rose really rapidly against the Peso immediately after the election," said George Hammond, PhD and lead economics economic researcher for the college.

That and a big spike in gas prices led to economic uncertainty in Mexico.

"The good news is over the past couple of weeks the dollar has started to come back down," he said. "That's good news for Arizona exports."

If things remain as they are, the problem may very well right itself and it's important that it does.

Southern Arizona does $2 billion in trade and tourism with Mexico annually. 100,000 jobs depend on that cross border co-operation. But dark clouds loom on the horizon, especially because of White House policy.

A proposed 20 percent cross border tariff which President Trump calls essential, could stymie recovery efforts.

"It would reduce overall economic growth and negatively impact jobs," Hammond said. It would "drive the unemployment rate up."

Hammond does not believe a border wall will hamper cross border trade, but he believes there are other things which could, like mass deportation. 

Those things are uncertain right now. However that uncertainty may have an impact on business decisions, which have immediate repercussions. 

That's one reason Caballeros Del Sol, a collection of businessmen in Tucson, have been sending trade delegations to Mexico for half a century. 

The last one, three weeks ago, was led by Jim King, a Tucson businessman and consultant for 30 years. 

King gauged the mood of the Mexican business community as "optimistic but cautious."

He says the relationships they have built over the past 50 years have turned to friendships, which gives them a level of trust that can overcome political rhetoric or hyperbole. 

He refers to how the area bounced back from the recession in 2010 which was exacerbated by the signing of the controversial immigration law SB 1070.

"We were able to get over than because of our friendships," he said. 

But there is still a hurdle to overcome.

"The biggest concern is just the uncertainty," he said. "They don't know what's going to happen."

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