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Latin America

Trump threats stir fear among Mexico's border traders

In Tijuana, where 80 percent of products sold use materials from the United States, storeowners are unsure if they will be able to continue under the same business model.
28 Ene 2017 – 12:50 PM EST
Four of every five businesses in Tijuana buy their supplies in the United States, according to the National Chamber of Commerce. Crédito: Joebeth Terriquez

TIJUANA, Mexico - David Acevedo wakes up everyday at 3 a.m. An hour later he is at the San Ysidro border post - one of two points in the city that funnel people from Tijuana to San Diego in the United States. He waits inside his car with a flask of coffee and some $1,000, ready to buy his stock.

Born in Michoacán, he has lived in Tijuana for 46 years. Half of his life has been spent running a clothing business. He started out buying used clothes, and once he was able to get a visa to cross to the United States, he traveled to Los Angeles, where he became familiar with the clothing stores. Now he buys all of his merchandise on the streets of Los Angeles and then crosses into Mexico to sell.

Ever since Republican Donald Trump took over the White House, Acevedo has been scared. He fears that one day he will show up at the border and suddenly not be allowed to cross.

"With this business, I have been able to pay for my children's school, feed them, live decently,” the 59-year-old says as he waits for the first customers to arrive at his Tijuana store. “We don’t harm anyone. I do not know what will happen."

The business climate here is risky, with uncertainty over the construction of a border wall and new import taxes. But Acevedo says he will continue to do what he always does: work. He wakes up at dawn, waits in line at the checkpoint and then drives two hours to buy clothes and participate in the American economy.

Acevedo’s store is just one of the 29,316 small businesses in Tijuana, from boutiques to restaurants. Four of every five businesses buy their supplies in the United States, according to the National Chamber of Commerce. Now they are unsure if they will be able to continue with the same business model.

Acevedo’s store is in the center of Tijuana, one of the most important commercial zones in the municipality, about 15 minutes from the San Ysidro checkpoint. As one of the main tourist areas in the city, the streets are bustling retail corridors.

Sign after sign advertises restaurants, bars and cantinas, as well as stores for shoes, clothes and beauty products, and even dental and medical services.

This is all part of the binational economy that functions between the borders of both countries: California in the south of the United States, and Baja California in the north of Mexico. The goods crossing the border each day feed the economy that has grown organically in the region.

Trucks and cars returning from the United States are visible from a distance at the Mexican customs checkpoint. Some carry in their trunks dozens of boxes filled with clothing. The sidewalks look like clotheslines as agents carry out inspections.

But this economy could now end, according to economist Felipe Ledezma. If Trump goes forward with his threats to tear up trade agreements, the border states will be the most affected because of their dependence on California.

According to figures from the National Institute of Statistics and Geography (INEGI), between 25 and 30 percent of the products sold in Mexico use material purchased in the United States, but in the state of Baja California the figure shoots up to 70 percent. In Tijuana it rises still more to 80 percent.

"That's to say, just looking at the dependence we have, seven out of 10 products in Tijuana are of American origin. Whatever you can think of -- shoes, clothes, the coffee that you drink the glasses you buy, school materials. You name it," he says.

The president of the National Chamber of Commerce, Services and Tourism (Canaco-Servytur), Gilberto Leyva Camacho, said that the most crucial supplies for local businesses are for restaurants, clothing and shoe stores and that there is high demand for vehicle parts and building materials.

"Between 70 and 80 percent of the products sold in Tijuana are on the other side (of the border), in some cases they are considered basic necessities," he says.

Elena Juárez, 36, has helped her husband sell tennis shoes at different stores in the city for 10 years.

Every weekend they wake up at dawn to visit sports stores on the U.S. side to take advantage of discounts, buy merchandise and then resell it back in Tijuana. Although a year or two ago the business was clearly profitable, business has been challenging in recent months, with a nearly 60 percent depreciation of the peso.

"We had to raise prices almost double and we do not sell as much," Juarez says, as she lifts the merchandise into her husband's truck. "I think now with Trump it will be less profitable than before, and we are even thinking about closing.”

Leyva Camacho says that large stores like Sears, which have franchises working with U.S. brands, set their prices from the United States. But against a backdrop of friction between Mexico and the United States, it’s unclear what will happen to trade agreements and whether tax increases will prevent them from maintaining their current business models.

"What we should do is buy Mexican,” he says. “The right thing is to avoid depending so much on another country. But the truth is that with Trump’s policies ... we all lose.”

Acevedo says he will not stop working. For him, the chances of finding another job are few and far between, especially at his age.

He has been a storeowner almost all of his life. In Michoacán, he would have liked to obtain a degree but did not have the opportunity. So he decided to travel to the northern border because he knew he could get a steady job there. He started out in an assembly factory until he was able to open his business.

His business has allowed him to have a good quality of life. That could change now, he says, if he has to buy merchandise within Mexico territory, as prices would rise.

"You would like to support the products of your own country but it’s more expensive to buy here than there. My real competition is with the gringos ... the customer dictates the market, not me,” he says.

The sky is still dark as Acevedo waits in his car at the border. The only light comes from the sidewalks, from the dozens of neon signs, and from the thousands of cars that also sit in line waiting up to four hours to cross to go to work on the other side of the border.

"In Tijuana, the dollar is the currency,” he says. Here you pay your rent in dollars, you can buy, you can pay with it. But now I don’t know what things will be like."