A second Donald Trump presidency is expected to bring heavy tariffs on Chinese goods, which might move some business to our binational region.

Some businesses interviewed by The New York Times said they have been frantically calling their Chinese partners to get as much supply to stock up before Trumps term begins.

Yet, another possibility pointed to by experts was the increase of nearshoring manufacturing to Mexico. Tijuana has benefited from increased outsourcing since the first Trump term, as a major hub for medical device manufacturing and other products.

However, while Tijuanas economy could benefit, the overall cross-border economy may suffer with proposed changes in immigration and tariff policies.

Question: Could Tijuana and San Diegos cross-border economy benefit from a second Trump term?

Economists

James Hamilton, UC San Diego

NO: Trump sees trade deficits as fundamentally harmful. Our $150 billion deficit with Mexico is not that much smaller than our $280 billion deficit with China. Trump recently threatened to put a 200% tariff on construction equipment imported from a proposed John Deere plant in Mexico. I expect to see aggressive steps to reduce Mexican imports. Efforts to control immigration are also likely to inhibit some of the cross-border shopping that has boosted San Diego’s economy.

Norm Miller, University of San Diego

YES: Truckers and warehouses will benefit. No one else. Consumers lose. Why? There is a “de minimis” Section 321 loophole whereby packages worth less than $800 are exempt from tariffs based on the logic they are too small to trifle with, which results in numerous Chinese goods being rechanneled through Mexico. Repacking warehouses in Tijuana to break up shipments of lower-priced goods will explode along with increased cross border shipping if tariffs go into effect.

Caroline Freund, UC San Diego School of Global Policy and Strategy

NO: Although Mexico has benefited significantly from tariffs on China, Mexico is Trump’s second favorite target. Trump has threatened to impose punitive tariffs on Mexican imports if the government doesn’t stop the flow of migrants and drugs. The self-proclaimed “Tariff Man” also hates trade deficits, so Mexico will find itself increasingly in the crosshairs if exports to the U.S. grow rapidly. Finally, Trump’s unpredictability generates a high level of policy uncertainty that depresses both investment and trade.

Kelly Cunningham, San Diego Institute for Economic Research

YES: Enacting tariffs fundamentally increases costs consumers ultimately pay. This may be justifiable, however, in compelling other nations to remove them. The objective should be to eliminate all tariffs allowing trade to move freely for the benefit of all participants producing the best outcome at lowest price to consumers. Mexico continues to offer nearshoring advantages for cross-border trade to the U.S. with San Diego and Baja California eminently positioned to benefit from each nation’s competitive advantages.

Alan Gin, University of San Diego

YES: Some firms may relocate from China to Mexico to avoid the heavier tariffs on Chinese products. If they do, that will increase cross-border trade between the U.S. and Mexico. But tariffs are being proposed on Mexican-made products, too. That will offset some of the gains from firms relocating to Mexico. The tariffs and a trade war may negatively impact the world economy, which in turn could affect the San Diego–Tijuana region.

David Ely, San Diego State University

NO: A large increase in nearshoring that boosts the local cross-border economy is an optimistic scenario. President-elect Trump has threatened higher tariffs to pressure Mexico to do more to stop the flow of migrants. He might also seek to impose tariffs on goods coming from Mexico in response to its large trade deficit with the U.S. Uncertainty during the Trump administration over tariffs and trade policies toward Mexico may dampen investments needed to boost nearshoring.

Ray Major, economist

YES: Mexico’s geographic proximity to the U.S., along with better government relations, makes Mexico the perfect strategic partner for the creation of a strong cross-border economy that benefits both countries and strengthens our strategic supply chain. The Trump administration will no doubt put significant pressure on our relations with China, allowing businesses in our cross-border economy to expand and flourish and in turn create tens of thousands of jobs on both sides of the border.

Executives

Chris Van Gorder, Scripps Health

YES: While there may be some turbulence with either border crossings or with tariffs, it would be difficult to believe that the Mexican and U.S. governments would not find some common ground to support both countries and economies. Greater clarity on immigration and the possibility of relatively stiffer Asian tariffs could make Mexico a good alternative for U.S. companies looking for lower-cost locations to base operations and manufacturing.

Jamie Moraga, Franklin Revere

YES: What looms are any policy impacts to border security, import tariffs and immigration. The region could benefit if border infrastructure improves to make cross-border trade and travel more efficient. As the United States main trading partner, the upcoming review of the USMCA could benefit both regions depending on negotiations. The cross-border economy remains important to our region and while U.S. manufacturing is a priority, it’s also vital to work together with Mexico to support mutually beneficial trade.

Phil Blair, Manpower

YES: Depends on how crazy the administration goes on tariffs. Is China the only victim or will Mexico be added to the list? Nearshoring is a good step, but not if the tariffs follow, too.

Gary London, London Moeder Advisors

NO: I anticipate a flurry of new construction of warehousing/industrial facilities in both San Diego and Mexico to get in front of tariffs and to fulfill manufacturing orders that might otherwise have been sourced in China. But the long tortured border crossing mess is likely to metastasize into longer lines and intense security scrutiny, which might result in a significant drop in cross-border trade and job movement. Stay tuned.

Bob Rauch, R.A. Rauch & Associates

YES: Despite a Trump-planned wall, both cities could benefit from improved infrastructure at the border to streamline the movement of people and goods. Investments in technology and innovative customs processes could cut wait times and boost trade, and binational collaborations in industries like manufacturing, tourism and education could also strengthen our shared economy. Given our likely tariff battle with China, it makes sense to get closer to Mexico. Tijuana and San Diego can benefit.

Austin Neudecker, Weave Growth

NO: Broad tariffs will cause immediate inflation on imported goods, impacting both American producers who require foreign inputs and consumers. Eventually, manufacturing could shift to (or through) Mexico if tariffs are uneven. To the extent imports are replaced with domestic sources, they will come at higher prices. Labor-wise, immigration policy needs to be overhauled, but mass deportations and border shutdowns compound our current labor force shortage, crippling agricultural and manufacturing capacity.

Not participating this week:

Haney Hong, San Diego County Taxpayers Association

Have an idea for an Econometer question? Email me at phillip.molnar@sduniontribune.com. Follow me on Threads: @phillip020