Texas Border Town Economics

Mar 12, 2017
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LOURDES GARCIA-NAVARRO, HOST:

Back over the border, here in the United States, the tough policies and rhetoric of President Trump are having some unintended consequences for the Texas border region. Trump has blamed Mexico for job losses in the United States because of NAFTA, the trade agreement, and for allowing drugs and immigrants to flood across the border, as he's put it.

I traveled to McAllen, Texas, earlier this month to see how the national discussion on those issues is being received by the communities that live in this area.

JIM DARLING: It doesn't help us economically.

GARCIA-NAVARRO: That's Jim Darling, the mayor of McAllen, Texas.

DARLING: We've been kind of probably hurt by the rhetoric going on in Washington more than any other community. We're the No. 1 sales tax collector - or No. 1 or 2 - in the state of Texas. And 40 percent of that comes from Mexican citizens shopping here.

GARCIA-NAVARRO: Mexican citizens who are no longer making the trek. In December, the governor of one of the wealthiest states in Mexico called on residents to boycott shopping in McAllen.

(SOUNDBITE OF VIDEO)

UNIDENTIFIED MAN: We shop for many reasons.

GARCIA-NAVARRO: As part of the outreach to Mexico, McAllen has started an ad campaign running in Mexican movie theaters.

(SOUNDBITE OF VIDEO)

UNIDENTIFIED MAN: And we shop because it's fun. Find your reason. Live the McAllen experience.

GARCIA-NAVARRO: Tax receipts in McAllen, Darling says, are down 4 to 5 percent. Part of that is also due to the devaluation of the Mexican peso, which has been hard hit recently. It plunged to an historic low against the dollar when Trump's victory was announced on November 9. Darling is worried that things aren't going to get better anytime soon.

DARLING: When people go away, it's harder to get them to come back. It could be a long - longer-term problem for us than we'd want, too.

GARCIA-NAVARRO: Jesus Gonzalez is seeing that firsthand.

JESUS GONZALEZ: We own, with my wife, a high-end furniture store that caters to the high-end clientele, mostly from Mexico.

GARCIA-NAVARRO: There is even a VIP section that sells a heavy selection of gold, acrylic and velvet sofas that could charitably be described as looking at a home in a Vegas penthouse. It's Saturday midday, and his store is empty.

GONZALEZ: So at the beginning, I thought it was only going to be temporary. But it's been pretty much the last three months that they've been boycotting, so they're serious. And I've talked to customers all the time, the few that still come, and they confirm that. They feel that the community there are thinking the same way. Let's spend our money here. Let's not send dollars to United States.

GARCIA-NAVARRO: Gonzalez, like the majority of people in this part of Texas, is of Mexican descent. He says he's been trying to tell his clients in Mexico that they are targeting the wrong region, but he says people in Mexico are angry.

GONZALEZ: I think our president's mouth, it's a bigger wall against our country than the physical wall. He is making our clients, customers not like us anymore. He is separating us from them.

GARCIA-NAVARRO: You blame him personally?

GONZALEZ: Of course, of course.

GARCIA-NAVARRO: And another thing that could have an impact on the local economy is NAFTA. The Trump administration is pressing forward on NAFTA. Commerce Secretary Wilbur Ross announced he hopes to launch formal negotiations within three months. Othal Brand would welcome that.

OTHAL BRAND: I don't think it needs to exist like it is. It needs to be modified.

GARCIA-NAVARRO: He's running for mayor of McAllen against Jim Darling. We meet him on his family's land by the Rio Grande River. He's a businessman, and he says companies aren't staying in the United States because it takes too much time, money and red tape to get things done. He says what NAFTA has done is encourage companies to move to Mexico.

BRAND: When I was growing up, we had tariffs, we had duties, and they were seasonal in the produce industry. When they did NAFTA and they took away all our tariffs and all our duties, the ones who got hurt the most was the worker. It wasn't the companies. They just picked up and moved. There's got to be a balance.

GARCIA-NAVARRO: That balance, though, is delicate in this area. You just have to go to the Starr-Camargo International Bridge to see how much trade there is between the two countries.

SAM VALE: You'll notice that here - this truck you see coming in front of us, that is recycled cardboard, and it's going to Mexico.

GARCIA-NAVARRO: Sam Vale is a wealthy businessman whose father built this bridge. He now owns it and leases it to the federal government. He took us on a tour. His bridge is painted gold on the U.S. side and blue on the Mexico side.

VALE: There's no rhyme or reason to the color schemes. It's just that we got some good gold marine paint that was at a good price and they had some blue (laughter).

GARCIA-NAVARRO: Speaker of the House Paul Ryan was just down in this part of Texas, and he met with Vale.

VALE: And we talked this - a total of three hours.

GARCIA-NAVARRO: It was a long talk that addressed a lot of issues. Vale has a nuanced view. He's not against renegotiation of certain portions of NAFTA or of tariffs on Mexican goods, but he says he gets frustrated with people discussing NAFTA and tariffs without really thinking about the impact. He says 40 to 60 percent of what's used in Mexican factories comes from the United States.

VALE: So that creates a huge job development activity.

GARCIA-NAVARRO: Here on the border and beyond.

VALE: You wouldn't have the Midwestern comforts and everything they do there if you didn't have a border. You know how much of the Midwestern stuff crosses here to go to Mexico for them to be able to sell their corn?

GARCIA-NAVARRO: The answer is a lot. American farmers are the biggest exporters of corn to Mexico. But now there could be trouble ahead with that. A Mexican senator has introduced a bill to mandate that Mexico no longer buy its corn from the U.S. but from Brazil or Argentina. The people here in the Rio Grande Valley say they feel caught in the middle and are bracing for what comes next. Transcript provided by NPR, Copyright NPR.