Long lines for trucks at the border after Governor Greg Abbott ordered increased inspections have cost Texas more than $4.2 billion in goods and services and the equivalent of 36,000 jobs, said a report by Texas economist Ray Perryman on Wednesday.
The border standoff essentially ended after nine days on Friday, with Abbott agreeing to end additional commercial vehicle inspections after the governors of four Mexican states — Chihuahua, Coahuila, Nuevo León and Tamaulipas — announced they had concluded security agreements with Texas.
But the dispute that began on April 7 has cost about $1 billion a day in cross-border trade in the United States and $470 million a day in Texas.
In total, it will cost the equivalent of 77,000 job-years for the country and 36,300 for the Texas economy, Perryman said. A work year is considered to be one person working for one year, although Perryman said that in this case it was mostly multiple people working for shorter periods of time.
For the United States as a whole, that’s about $9 billion in lost gross domestic product, Perryman estimated. He owns studied Texas economics for over 40 years and produces regular economic reports on important events affecting the state.
“The problem with the frontier is that we don’t have excess capacity,” said Perryman, president and CEO of economic advisory firm The Perryman Group in Waco. “It’s not like you lose 1,000 trucks one day, you can make it up the next.”
Asked about the economic impact of the checkpoints, Abbott reiterated his position that President Biden is to blame.
“A 5-hour average delay for enhanced vehicle inspections barely equates to President Biden’s 15-month delay to secure our border,” said Renae Eze, the governor’s spokeswoman. “Democrats like President Biden who decry our efforts to secure our southern border with a week of enhanced vehicle inspections have remained completely silent as California’s ports come to a standstill, creating a months-long backlog of thousands of containers stuck on freighters.”
Perryman said it would take weeks to work out backups on bridges in places like Brownsville, Laredo and El Paso. There are 27 international checkpoints along Texas’ 1,254-mile border with Mexico. About 70% of all freight trucks entering the United States from Mexico do so at one of these border crossings in Texas, according to the United States Bureau of Transportation Statistics.
In February, according to the most recent data available, $39.5 billion worth of goods were trucked across the Texas-Mexico border in both directions. These goods included computers, vehicles, electrical machinery and related parts.
Some products, such as fruits and vegetables, will be permanently lost while production of other goods made in Mexican factories known as maquiladoras will temporarily slow to accommodate lower shipping volumes, Perryman said. .
Abbott ordered increased inspections along the border after the Biden administration announced plans to end the Title 42 emergency health order used to immediately deport undocumented immigrants found in the United States. during the COVID-19 pandemic.
While U.S. Customs and Border Patrol are already conducting inspections, Abbott ordered officers from the Texas Department of Public Safety to the border for increased inspections.
During the nine days of slowdowns where wait times at bridges rose to 12 or 4 p.m., shippers complained that produce was rotting. The city of Pharr in the Rio Grande Valley said it suffered about $200 million a day in business losses and up to $1 billion a week due to slowdowns on its international bridge.
“While border security is certainly an issue that needs to be addressed, introducing artificial inefficiencies into a large, capacity-limited element of an already overstretched national supply chain is a costly option,” Perryman’s report says.
DPS reported that inspections have mostly resulted in vehicles being taken out of service for faulty brakes, faulty tires and faulty lighting.
Perryman arrived at the total figure of $1 billion a day by multiplying the value of reduced goods crossing the border with standard economic multipliers to show the total impact of these goods over their useful life, whether he whether it’s a factory’s economic output in the United States or retail sales, he said.
The largest losses were suffered by the manufacturing sector, which suffered around 50% of the hit, followed by retail, wholesale and financial activities. Manufacturing and retail accounted for the bulk of the job losses. That’s not even taking into account the slowdown in buying on the US side of the border. According to the Dallas Federal Reserve, approximately 30% of all retail sales along the border come from buyers from Mexico.
This slowdown, due to its short duration, is unlikely to have a long-term impact on border trade, Perryman said. Compare, the 2019 slowdown along the border after former President Donald Trump ordered customs officers diverted to search for undocumented immigrants, it cost an estimated $39 billion in lost gross domestic product and the equivalent of 620,000 years of employment.