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How Trump’s trade policy could affect jobs in the U.S. and Mexico

November 29, 2016 at 6:25 PM EST
A central tenet of President-elect Donald Trump’s campaign platform was reclaiming American jobs that have moved overseas. But how might the disruption of existing international trade agreements affect companies -- and the American consumer? In the second of a series on U.S.-Mexico relations, special correspondent Nick Schifrin reports in collaboration with the Pulitzer Center on Crisis Reporting.
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HARI SREENIVASAN: Now to President-elect Trump’s focus on Mexico, and how Mexico is responding to his victory.

Last week, we examined Trump’s promises to build a wall and deport undocumented immigrants.

Tonight, in part two of our series, his economic pledges and threats to derail trade deals and interrupt billions of dollars of remittances sent from the U.S. to Mexico.

Special correspondent Nick Schifrin and producer Zach Fannin, again with the help of the Pulitzer Center on Crisis Reporting, begin our story well north of the border, in Columbus, Ohio.

NICK SCHIFRIN: What would you have described this community as when you were growing up?

JEFF FERRELLI, Owner, Minnelli’s Restaurant: Blue-collar, hardworking, good schools, just good, honest people.

NICK SCHIFRIN: For 49 years, Jeff Ferrelli, his sister and their father have run an Italian restaurant at the center of a neighborhood where everybody knows your name.

JEFF FERRELLI: Same people sitting in the same booths at the same time every day, and sort of like that Cheers kind of atmosphere, you know?

NICK SCHIFRIN: Just down the block was the neighborhood’s heart and soul. This huge space used to be the Delphi auto plant, the area’s largest employer. Ferrelli worked there for 15 years.

JEFF FERRELLI: It was hot. It smelled. But everybody in there worked hard, and were proud of what they were doing.

NICK SCHIFRIN: But, by the early ’90s, the economy started declining. By 2007, the plant closed. They ripped it down to build a casino, and the community never regained its prosperity or pride.

Today, the Macy’s is still barren, other than the graffiti. The nearby movie theater has gone dark. Once-thriving businesses can’t find new owners.

DONALD TRUMP (R), President-Elect: We’re living through the greatest jobs theft in the history of the world. Delphi laid off 5,805. What’s with Delphi? The Trump administration will stop the jobs from leaving Ohio and from leaving America.

NICK SCHIFRIN: The message during the campaign that Trump put out while in Ohio, did that appeal to you?

JEFF FERRELLI: The incentives are to put your businesses overseas. Hopefully, some groundwork will be put in place to correct that.

NICK SCHIFRIN: Ferrelli knows that there are many reasons for the closed plant, but his nostalgia allows for an easy target: the neighborhood’s growing number of Hispanic and Somali immigrants.

JEFF FERRELLI: The influx of new people doesn’t match the ones that have left. And I guess that’s kind of the big thing.

NICK SCHIFRIN: President-elect Donald Trump links those immigrants with jobs lost to some of the same countries.

DONALD TRUMP: They get the jobs, the plants, the money. We get the drugs. We get the unemployment. It’s a one-way street. Not going to happen anymore, folks. Not going to happen anymore.

NICK SCHIFRIN: Twenty-three hundred miles south, in the Mexican city of Juarez, the Delphi plant occupies pride of place. This 24-year-old works on the factory floor. Delphi declined an interview request, so he felt he had to stay anonymous. He invited us for breakfast burritos.

How important are the Delphi plants to you and this community?

MAN (through translator): It’s my means of work, my means of sustaining my family, and it’s the means of sustaining the community.

NICK SCHIFRIN: Early every morning, he and hundreds of people file out via bus after Delphi’s overnight shift. Delphi is Mexico’s largest private employer, and has helped lift up the working and middle classes here. It’s provided the collective pride that Western Columbus lost, even if his starting salary was only $12 a day.

How have American companies that have come in here like Delphi helped changed the city?

MAN (through translator): It’s much more stable economically. We have better houses, better cars. Even the school system has improved.

NICK SCHIFRIN: On the campaign, Trump argued Delphi’s gains in moving to Mexico came at the expense of American losses, because of the North American Free Trade Agreement, or NAFTA, the 1994 trade deal between the U.S., Canada and Mexico.

According to the nonpartisan Congressional Research Service, NAFTA’s benefits have been spread out, and not widely felt. But its costs have been concentrated and helped accelerate U.S. manufacturing losses. In order to protect that manufacturing, Trump has promised to pull out of NAFTA, or impose heavy tariffs on Mexican goods.

DONALD TRUMP: This wave of globalization has wiped out totally, totally our middle class. It doesn’t have to be this way. We can turn it around, and we can turn it around fast.

NICK SCHIFRIN: Juarez Mayor Armando Cabada can’t even imagine Trump enacting all his campaign pledges.

What impact would changing NAFTA have on the people of Juarez and the city of Juarez?

MAYOR ARMANDO CABADA, Juarez, Mexico: We are the principal makers of TVs in the world, one of the principal providers for the car industry in the world. How can he halt this? Only a crazy man would do that.

NICK SCHIFRIN: From his roof, Juarez is only a few feet from El Paso, Texas. The two economies are just as interdependent. The U.S. buys nearly 80 percent of Mexican exports. And Mexico is the U.S.’ second largest trading partner.

MAYOR ARMANDO CABADA: (through translator): He’s going against the current. It’s a misunderstanding of the world we live in now, the globalized world in which we are all immersed.

NICK SCHIFRIN: Since NAFTA, in cities like Juarez, American companies line the streets. The stores and supply chains are completely integrated across the border. Mexican workers now manufacture parts that American workers need.

Two weeks ago, Delphi’s CFO said if Trump closes the border — quote — “In less than a week, all the people who voted for him in Michigan and Ohio would be out of work.”

Economics professor Valeria Moy agrees.

VALERIA MOY: You are going to disrupt all the supply chains. And that’s going to be huge, not only for Mexico. Of course, for Mexico, it’s going to be huge. But for the States, it’s going to be huge.

NICK SCHIFRIN: She points out NAFTA hasn’t only helped Mexico. Those American companies in Mexico are profitable. NAFTA helps employ six million or more Americans and provides Americans with cheap products.

VALERIA MOY: That flat-screen that you bought that’s like 60 inches’ huge, with sound surround, and it’s really nice, and it cost you $1,000, guess what? You’re not going to have that anymore, because that was made in Mexico.

NICK SCHIFRIN: And that means Mexico’s economy is now much more dependent on its ability to send products north.

VALERIA MOY: Many parts of the country will be very, very significantly damaged if Donald Trump enacts any measure of protectionism.

DONALD TRUMP: And every time I see a Delphi, and every time I see these companies leaving, that wall gets a little bit higher and it keeps going up.

NICK SCHIFRIN: To try and force Mexico to pay for the promised southern border wall, Trump has threatened a second blow to the Mexican economy and to people like Marta Garcia. She runs a Mexico City food truck and makes a few dollars a day.

Last year, her oldest daughter fled to the U.S. and sends money home. Every year, Mexicans send $25 billion of remittances. Trump is promising to halt or tax that money.

What would happen if your daughter couldn’t send any money, or could only send only a fraction of the money that she has been sending recently?

MARTA GARCIA, Food Vendor (through translator): I would have to tell my other children that I am very sorry, but I would take them out of school so they could work.

NICK SCHIFRIN: Every few days, the family walks together to pick up the daughter’s money at the local Western Union. Marta hopes the money keeps flowing, so her children receive the education she never did.

MARTA GARCIA (through translator): You have to have education, an education, so that they can pay you a little more. If you don’t have an education, they will not pay you enough, and that’s why many people leave to the U.S.

NICK SCHIFRIN: That’s a warning that many here make. Cutting remittances, curtailing trade, and imposing tariffs could exacerbate the very problems that Trump is vowing to stop.

VALERIA MOY: It will enhance the idea of illegal immigration, because the situation in Mexico is going to be worse.

NICK SCHIFRIN: Enrique Krauze is one of the country’s most prominent historians, and goes even further.

ENRIQUE KRAUZE, Historian: NAFTA, immigration, deportations, the wall, yes, those are very important issues socially and economically, but, first of all, dignity and respect. We need an apology.

NICK SCHIFRIN: He says Mexicans overwhelmingly oppose Trump, not only because of his policies, but because of the most negative rhetoric by any U.S. president since the late 1920s, when president Calvin Coolidge considered Mexico a communist enemy.

ENRIQUE KRAUZE: Those wounds are now part of the remote history, truly remote. Now those wounds, incredibly, would be opened.

NICK SCHIFRIN: We saw signs of those festering wounds on an otherwise normal Tuesday at a quintessentially Mexican store. Trump has sparked a pinata renaissance. We thought Mexicans would, well, bash Trump, but they were measured and deeply fearful.

MAN (through translator): I don’t like that he was elected, because the situation is already hard and will become harder next year.

MAN (through translator): It’s not fair. Donald Trump talked about many things that offended us Mexicans. The truth is, I don’t like he came into power.

NICK SCHIFRIN: For many Mexicans, Trump’s victory is a nightmare. For some Americans in the struggling Midwest, it’s an opportunity. The relationship hasn’t been this fraught in nearly a century.

For the “PBS NewsHour,” I’m Nick Schifrin in Mexico City.

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