US-Mexico border closure could have a crippling effect on the American auto industry - Wells Fargo

According to analysts at Wells Fargo, the closure of the US - Mexico border would have effects on the US economy. They see that although a recession probably would not ensue, the costs could add up if the border remained closed for an extended time.

Key Quotes: 

“The United States sent $33 billion worth of transportation goods south of the border last year while it received $120 billion from Mexico, the vast majority of which were auto imports. About $64 billion of these auto imports were finished vehicles, but roughly $50 billion were auto parts.”

“A closure of the border could have a crippling effect on the U.S. auto industry. Many car manufacturers keep lean inventories of parts. If they can’t receive these parts, production of vehicles in American factories could come screeching to a halt quickly.”

“Under the extreme assumption that a closure of the border would cause all motor vehicle production in the U.S. to come to a complete halt, then the direct hit to the U.S. economy would be about $2.5 billion per week (...) this amount represent less than 1% of the value added that is created in the U.S. economy. But there would be multiplier effects if idle auto workers pared back their purchases of goods and services.”

“Realistically, however, a closure of the southern border likely would not be disruptive enough to cause a recession in the U.S. But the costs to growth could start to add up if the border were to remain closed for an extended period of time.”