Trade compliance requires everyone to participate as demonstrated recently on the MX / TX border
Summary: in October 2023, lasting for about 5 weeks, The State of Texas imposed additional truck inspections for trucks entering the Us from Mexico. This restriction negatively impacted 19,000 trucks transporting $2Billion in trade value. Some companies experienced short term closures, and many companies – especially automotive manufacturing – experienced expensive delays.
In our last blog post, we talked about recent international trade sanctions which focused on China. We shared the potential impacts on individuals, the companies they represent, and even university connections.
This article continues the theme focusing on how trade sanctions impact public policy and the economy. In short, it is a team effort to make sure the system works. Think of it in terms of a long game and we want US manufacturing and technology interests to win. When we do not work together, Government may use a blunt policy instrument that can hurt us all.
During 2021, the US imported more than $384 BILLION dollars of goods from Mexico. In September and October of 2023, for about 5 weeks, the state of Texas imposed additional truck inspections that impacted 19,000 trucks, representing almost $2 Billion dollars in trade value. The resulting delays ultimately caused the closing of Canadian owned Bombardier operations in Mexico. The delays incurred countless other costs for American automotive manufacturers; all of whom have complex supply chain and logistics operations between the US and Mexico.
Taken at face value, the state of Texas took these actions to stem the flow of illicit goods (mostly drugs) and illegal immigrants across the border. However, it affected the flow of all goods across the border. If all companies and people involved in international trade worked to eliminate illicit trade practices, the additional inspections would not have been necessary.
Even though the situation is complex in many ways, we need to remember the simple fact that the bad guys are always trying to subvert the rules. It is incumbent on ALL of us Good Guys to work to prevent illicit practices. As our sports friends like to say: “Teamwork makes the dream work!”
The state of Texas used a blunt policy instrument – truck inspections – to manage international trade compliance. While the order was rescinded after only 5 weeks, this is a great example of why we must all work together as a team to proactively reduce illicit trade. It is in our own best interests. Let’s go Team!
Additional Reading
Truck Inspections at the Texas Border
This is one of many articles published in early October outlining the negative side (from the Mexican perspective) of renewed inspections of Mexican trucks at the Texas border and their impact on Mexican exports (or imports from our side).
Inspections Supended
This just came out announcing a suspension of the inspections. The article is in Spanish, but if you open it in Edge or Chrome, you will see a ‘translate’ button to translate it to English.
