We live in a world where Japanese-branded trucks are built with American-made parts and assembled in Mexican factories.
“The Toyota Tacoma gets assembled between San Diego and Tijuana,” said Jessica Anderson, interim president and CEO of the San Diego Regional Chamber of Commerce. “You see parts cross the border maybe five or six times before the truck is even fully assembled.”
Imagine paying a 25% tariff each time one of those parts cross the border?
Possibilities like that had business leaders throughout the border region on edge from the moment President Donald Trump announced over the weekend that the 25% tariffs would go into effect on Tuesday.
Anderson spent the weekend fielding calls and emails from worried business owners.
“For some, it’s ‘Can my business even survive this,’” she said. “It’s not simply about, ‘do I just need to raise prices a little bit or maybe I don’t put that new product out.’ This is life and death for some businesses.”
Those businesses can rest easy — but not for long.
Mexican President Claudia Sheinbaum announced a last-minute deal with President Trump to avoid the tariffs until at least the end of the month.
Mexico promised to send more National Guard troops to the border and the United States promised to try to slow the flow of illegal guns into Mexico, Sheinbaum said in her Monday press briefing.
Sending Mexican National Guard troops to the border is not new. Mexico routinely sent troops to the border during the previous administration.
A similar agreement played out on the north side of the border, with Canada avoiding the same tariffs by agreeing to implement a $1.3 billion border security plan that was originally announced last year.
Trump has used the threat of tariffs as a negotiation tactic in the past. During his first administration, Mexico agreed to participate in the controversial Remain in Mexico program only after Trump threatened then-President Andres Manuel Lopez Obrador with tariffs.
Regardless of whether Trump intended to carry out the threat or simply used it as a bargaining chip, local business leaders believe it has already had a negative impact on the binational economy.
“This is causing a lot of uncertainty,” Anderson said.
And that uncertainty is bad for business because it impacts long-term strategy.
“We will never know the impact of all the investors who were thinking of moving here or expanding,’ said Alejandra Mier y Teran, the executive director of the Otay Mesa Chamber of Commerce.
Mier y Teran said news of the tariff pause was definitely positive. But the overall threat of tariffs still looms over the entire region.
She heard from at least one member of the Chamber of Commerce who canceled plans to sign an expansion lease for a commercial property in Tijuana.
Approximately 80% of the chamber’s members work in cross-border trade.
“Any disruption with tariffs would be a big hit to our companies, and that certainly means job losses,” Mier y Teran said.
One of the downsides of using tariffs as a negotiation tactic, is that local businesses get caught in the crossfire, she added.
