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What the Partial Southern Border Closure Means for Sourcing in Mexico

In an effort to stem the spread of COVID-19, the United States and Mexico agreed on a partial border closure Friday, and companies have mixed feelings about the measure’s potential supply chain impacts.

While non-essential travel has been halted for a period of 30 days, “subject to extension upon review,” the aim on both sides of the border is to continue facilitating trade.

“Recognizing the robust trade relationship between the United States and Mexico, we agree our two countries, in response to the ongoing global and regional health situation, require particular measures both to protect bilateral trade and our countries’ economies and ensure the health of our nations’ citizens,” the Department of Homeland Security said in a statement Friday.

So far, manufacturers and movement among their workers are being considered essential.

“The concern is being on a border that’s travelled every single day—very differently than Canada, [factory workers] were concerned that they’re not going to be able to go back home or not going to be able to go to work and come back,” Eduardo Acosta, vice president of R.L. Jones Customhouse Brokers and president of the Pacific Coast Council of Customs Brokers and Freight Forwarders Associations, told Sourcing Journal. “Luckily it came out that that is essential, that will be OK.”

As of now, according to Acosta, Mexican citizens driving trucks across the border to U.S. warehouses, or those inspecting goods, won’t see their movements restricted because that, as well as all other logistics and supply chain distribution services, has been deemed essential trade. U.S. citizens who work in Mexican factories will also be able to travel back and forth across the border between work and home. However, with the non-essential travel ban in place, factory workers and others in the supply chain may be subject to increased questioning at the border about where they’re headed and why.

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“Where it starts getting a little complicated for us,” Acosta explained, is that “if Mexico tomorrow says we’re shutting down, I don’t know what Mexico’s rules are as far as what a manufacturing plant can do. Now, I know for the U.S., that’s considered cross-border trade.”

The reason the Trump administration and its Mexican counterparts agreed to a partial border closure rather than a wholesale shuttering, is because of how critical commercial trade is between the countries. In the case of a more wide-reaching shutdown on either side of the border, Acosta believes Mexico will still continue to manufacture goods and keep the supply chain going.

“[Fashion] is a very unique industry. Because we know what’s going on with China, eventually we’re going to get a lot more businesses once this settles,” he said, noting, however, that that won’t happen as quickly as anyone would like. “Things stay like this for 30 days, the uncertainty continues. But knowing that we’re an industry that will eventually rebound and then some, I think that’s what we’re trying to keep the focus on and stay optimistic.”

For now, factories like Global Denim—which has a mill in Puebla and is situated closer to the center of the country near Mexico City, and thus impacted less by workers’ cross-border movements—aren’t expecting the partial border to be all that adverse for business.

“We are not expecting the border closure to impact us, as we continue to provide the best service in these hard times and will keep our customers in our top of mind,” Global Denim creative director Anatt Finkler, told Sourcing Journal. “Of course, traveling to see customers is limited, but with today’s technology, we are going to manage to communicate with them through different mediums, call it phone calls or video meetings, and provide them with our collection and sampling as usual, so they can review it freely in their own workspace.”

Of course, beyond the border closure, the novel coronavirus has already had its impact on the sector in Mexico.

“This virus has affected the supply chain in every sector of the economy,” Finkler said. “It is very concerning to live through these times as uncertainty reigns and the possibility of a big downfall of the economy is imminent. The retail supply chain has been really impacted as stores are closing, and therefore production has to slow down, as people are not be able to buy, and brands don’t want to overproduce goods and overstock.”

Mexico, however, where the current count of confirmed coronavirus cases, according to the World Health Organization (WHO), rests at 370 (paling in comparison to the United States’ 42,164), doesn’t stand to be any more impacted than other manufacturing countries, though it will feel the burden of the global pandemic.

“I think at this point, manufacturing in the entire world is going to be impacted equally,” Finkler said. “This is a worldwide crisis that needs to be handled and resolved.”