White House looks to minimize economic impact of Trump’s threatened closure of Mexico border – The Washington Post

Senior White House officials are looking at ways to exempt commercial trade from President Trump’s threat to shut down the U.S. border with Mexico, three people briefed on the discussions said, amid warnings that blocking the flow of goods between the two countries would have severe consequences for the U.S. economy.

White House officials have not settled on a firm plan, but they are responding to widespread complaints from business groups that closing the border would be a major blow to industries such as agriculture and automakers. Trump has also been briefed on thethe economic consequences by top advisers, National Economic Council Director Larry Kudlow and Kevin Hassett, head of Trump’s Council of Economic Advisers.

“We’re watching it and looking for ways to allow the freight passage. Some people call it truck roads,” Kudlow said in an interview with CNBC. “And there are ways you can do that, which would ameliorate the breakdown in supply chains.”

Senate Majority Leader Mitch McConnell (R-Ky.) has also expressed concerns that shutting down the border would hurt the economy, according to an adviser who requested anonymity to describe private discussions.

“Closing down the border would have a potentially catastrophic economic impact on our country, and I would hope that we would not be doing that sort of thing,” McConnell told reporters Tuesday.

Sen. John Kennedy (R-La.) said shutting down the border could cost the U.S. economy $1 billion or $2 billion each day.

Trump has threatened to close the border with Mexico as soon as this week due to the recent surge in migrants coming to the United States from Central America, although he has mused about the possibility of closing down the border for months. The president said on Tuesday that he is more focused on security concerns than the impact closing the border would have on the U.S. economy.

“Security is more important to me than trade,” Trump told reporters.

Trump has also been told by some advisers that it would be extremely difficult to operationally shut down the border but he has told them to move forward with looking at ways to achieve the feat.

Despite the logistical and economic concerns, White House aides have said this week that Trump is serious about closing the border even if the timing remains unclear.

On Tuesday, White House press secretary Sarah Sanders softened Trump’s threat to close the southern border by the end of the week, saying that such a move was not the president’s “first choice” and that he does not have a “specific timeline.”

“Eventually it may be the best decision that we close the border,” Sanders told reporters at the White House, adding that Mexico has taken some concrete steps to slow the flow of migrants coming into the United States, as Trump has demanded.

“He’s hoping that Mexico will continue to step up, like we’ve seen them do over the last couple of weeks,” Sanders said. “We hope that that continues, and that we can work with them so we don’t have to [close the border].”

Trump has told advisers that he would close the ports of entry and reallocate the border patrol agents to other parts of the country. In Trump’s mind, the closure is about leverage — forcing people to think he’s about to do it, and just might do it, to get other concessions, current and former aides said.

Trump has used a similar approach before with trade negotiations and even in the run-up to the government shutdown last year. Some times he backs down at the last moment, and sometimes he follows through.

But the fact that White House officials are looking at ways to address the fallout of his latest threat shows how real the option has become, at least internally.

Completely shutting down the U.S. border with Mexico, as Trump has threatened, could halt all U.S. automotive manufacturing within a week, impacting at least one million jobs, said Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research. She said virtually all U.S. auto production relies on some key parts from Mexico or Central America, and these products are brought into the United States on trucks or trains.

“The building of vehicles requires 100 percent of the parts to be there,” she said, adding that seat belts, engines, transmissions, and wiring harnesses are all brought across the U.S. border.

The U.S. Chamber of Commerce began raising alarms last week about Trump’s threat to shut down the border, saying it could have a crippling effect on the U.S. economy. But Trump has so far refused to back down.

Mexico is the U.S.’s second-largest trading partner, meaning that any disruption at the U.S. border could have immediate consequences on the economy. U.S. companies imported $314.3 billion in goods from Mexico in 2017, according to the Office of the U.S. Trade Representative. And U.S. companies exported $243.3 billion in goods.

The top imports from Mexico are automobiles, electrical machinery, medical instruments, and mineral fuels, among other thing. The U.S. also imports more agricultural goods from Mexico compared with any other country, with $11.5 billion in fresh fruit and vegetables brought into the U.S. each year.

White House press secretary Sarah Sanders on Tuesday, asked about the economic impact of closing the border, said “it’s not our first choice.”

But, she said, Trump could be left with little option if the Mexican government doesn’t do more to address the number of people trying to enter the United States.

John Wagner and Erica Werner contributed to this story.

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