White House economic adviser Larry Kudlow says the White House seeks to minimize economic damage if President Donald Trump closes the U.S.-Mexico border.
Kudlow told CNBC that the Trump administration was exploring whether it could permit trucks carrying freight to cross the border if it is sealed.
Kudlow spoke as Trump took a step back on Tuesday from a threat to close the southwestern border to fight illegal immigration, crediting Mexican officials with taking big steps in recent days to apprehend more U.S.-bound migrants crossing their country.
After pressure from U.S. and foreign companies worried that a border shutdown would cause chaos to supply chains, Trump underlined efforts by Mexico at its own southern border to hinder illegal immigration from Central America, Reuters reported.
Trump threatened on Friday to close the border this week unless Mexico took steps. He repeated that threat on Tuesday but said he had not made a decision yet: "We're going to see what happens over the next few days."
Closing the border could disrupt millions of legal crossings and billions of dollars in trade. Automaker companies have been warning the White House privately in recent days that closing the border would lead to the idling of U.S. auto plants within days because they rely on prompt deliveries of components made in Mexico.
Kudlow, the Director of the National Economic Council, cautioned that the president has not made any final decisions.
“We are watching it and looking for ways to allow the freight passage, some people call it truck roads, and there are ways you can do that which would ameliorate the breakdown in supply chains,” the veteran financial guru and former Ronald Reagan adviser told CNBC.
“The question is: Can we deal with that, and not have economic damage? And I think the answer is: We can, and people are looking at different options,” said Kudlow, who worked as Reagan’s budget deputy between 1981 and 1985.
“Particularly if you can keep those freight lanes, truck lanes, open, that’s probably the nub of it,” said Kudlow, who served as the Trump campaign's senior economic adviser.
Kudlow said that allowing workers to cross the border could be more difficult.
“I don’t want to comment on it because we are playing right now — what you want to do is stop the emergency and the breakdown, and you want to try to limit whatever harm that does,” he said. “It’s a very difficult task. I think it’s doable.”
For his part, Trump praised Mexico on Tuesday for stepping up efforts to stop the flow of migrants crossing their territory.
"Mexico, as you know, as of yesterday has been starting to apprehend a lot of people at their southern border coming in from Honduras and Guatemala and El Salvador and they're really apprehending thousands of people. And it's the first time really in decades that this is taking place and it should have taken place a long time ago," Trump told reporters.
"They say they're going to stop them. Let’s see. They have the power to stop them, they have the laws to stop them," Trump said.
PUSH BACK
Trump has made fighting illegal immigration from Mexico a key part of his agenda but shutting down one of the world's most used borders might be a step too far even for many of his fellow Republicans.
Senate Republican leader Mitch McConnell said closing the border could have devastating economic consequences, and joined his Democratic colleagues in warning Trump against such a move.
"Closing down the border would have potentially catastrophic economic impact on our country and I would hope we would not be doing that sort of thing," McConnell told reporters at the Capitol building.
A group representing General Motors Co, Ford Motor Co and Fiat Chrysler Automobiles NV said in a statement that "any action that stops commerce at the border would be harmful to the U.S. economy, and in particular, the auto industry."
The Mexican Embassy reached out to automakers over the weekend to sound the alarm, automakers said on the condition they not be named. In total, dozens of U.S. vehicle, engine, transmission and other auto parts plants could close because of a lack of component parts in the coming days and weeks after a border shutdown. It would also prevent thousands of vehicles built in Mexico from landing in U.S. dealer showrooms.
Automakers exported nearly 2.6 million Mexican-made vehicles to the United States, in 2018, accounting for 15 percent of all vehicles sold in the United States. Some vehicles like the Chevrolet Blazer SUV are only made in Mexico.
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