Border Wall and the U.S. Economy

One of President Donald Trump's most significant campaign promises was to build a wall on the border between the United States and Mexico. He is demanding that the United States Congress find a way to allocate funds in the budget for this wall. A question that continually circulates is whether the border wall will benefit or damage the U.S. economy. However, some people believe that building this wall could potentially harm American businesses, American taxpayers, and U.S. jobs (Chopra, Sehgal, & Avgerinos, 2017).

There is a common fear that constructing a border wall between the United States and Mexico could lead to a trade war. According to the Investopedia website, a trade war is defined as 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 initially started as a means to create jobs and protect the economy (Amadeo, 2018). As a trade war intensifies, it can lead to a decline in international trade (Amadeo, 2019).

A trade war with Mexico could bear heavily on the U.S. economy since Mexico is the third-largest trading partner, with over $2 billion in export business from the U.S. to Mexico each year (Chopra et al., 2017). The construction of the border wall could upset Mexico and may lead to Mexico boycotting some U.S. imports (Chopra et al., 2017). For instance, around 30% of U.S. corn exports are bought by Mexico. If Mexico decides to stop purchasing U.S. corn, it could have a negative impact on U.S. farmers (Chopra et al., 2017). In the short term, the impact of a trade war might not seem significant. However, in the long run, a trade war can result in an economic depression.

The projected cost of building the border wall between the U.S. and Mexico is between $8 billion and $12 billion (Snyder, Chopra, & Gingrich, 2017). With Mexico stating that they will not finance the wall, President Trump has two remaining options: use the Patriot Act to compel Mexico to fund the wall, or have U.S. taxpayers foot the bill (Chopra et al., 2017). According to the Pew Research Center, over 60% of Americans oppose building a border wall, and many believe that U.S. taxpayers would ultimately pay the construction costs, as shown in Table 1 (Suls, 2017). Just over two weeks ago, the U.S. federal government shut down due to disagreements over a spending bill that included funding for the border wall (Tuttle, 2019). It has been estimated that the economic cost of the government shutdown may already exceed the $5 billion President Donald Trump is demanding for the wall (Suls, 2017).

This border wall between the U.S. and Mexico may affect workers, tourists, and students who cross the border daily (Ewing, 2016). In 2010, approximately 13 million Mexicans 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, estimated to be over 20% of all U.S. jobs, would be severely impacted, if not done away with completely (Ewing, 2016).
While it's still unclear just what economic impact the border wall between the U.S. and Mexico will have, many believe the negatives will outweigh any positives. Both immigration and the border wall have been, and will continue to be, hot-button issues (Salay, 2017). While the wall is being built, there may be a rise in jobs associated with the wall, but these jobs are only temporary and will disappear once the wall is completed. So far, the U.S. government has not come to any 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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