Abbott's increased border inspections led to over billion in economic output loss in El Paso

Gov. Greg Abbott's short-lived increased border inspections cost El Paso about $1.3 billion in economic output, according to an analysis by Texas economist Ray Perryman.

Estimates of staggering losses are rolling in as economists, the city and private sector calculate the cost of Abbott's decision to intensify state inspections of commercial trucks at the U.S.-Mexico border in early April. The damage was swift in the El Paso-Juárez corridor, where $9 billion in merchandise is processed monthly by the El Paso Customs District.

"Trade is very important to the Texas economy," Perryman said. "Anything that we can do to make the flow of goods more efficient is very good for Texas and especially for major border crossings such as El Paso. Anything that impedes trade will result in losses."

Economic output is a measure of "gross area product," or the local version of gross domestic product. Perryman estimates Texas lost $4.2 billion in GDP during the border trade slowdown.

Perryman, a Waco-based economist, provides economic analysis and forecasting for private companies, cities and states to help guide their decision-making on economic development.

On April 6, Abbott ordered state troopers to inspect every commercial truck that crossed the border after the Biden administration said it would lift a COVID-era health policy, known as Title 42, which allows for the quick expulsion of migrants at the border. The inspections immediately provoked a massive backup in truck traffic; drivers reported waiting six to 12 hours, even days, to cross their loads. In Juárez, truckers blockaded ports of entry in protest.

More:Abbott's office won't release many documents, letters related to border truck slowdown

Many in the Borderland viewed the order as a political stunt by a governor likely positioning himself to compete for the 2024 Republican presidential nomination; the inspections were limited to a safety review and didn't include searches for contraband. Abbott countered that drastic measures were needed to call attention to an increase in illegal immigration. 

U.S. Customs and Border Protection already inspects tractor-trailers for smuggled goods or people at border crossings. Violations are exceedingly rare in the commercial lanes as companies have a vested interest in securing their supply chains, according to CBP. The federal government has also implemented successful programs to vet transportation companies that move products across the border.

Abbott ended the enhanced inspections the second week of April after he signed consecutive "memorandums of understanding" with four Mexican border state governors, who agreed to boost security on the south side of the border. 

A couple of weeks later in Juárez, in late April, it was business as usual.

What to know:What is Title 42, when does it end, how does it impact US-Mexico border?

Half a dozen Chihuahua state police waited in the shade near the commercial truck line at the Bridge of the Americas, checking their phones and chatting. They weren't there to inspect cargo, they said; they were on hand in case the truckers decided to protest again.

Nearby, security guard Fernando Galindo walked a drug-sniffing K-9 around the waiting line of tractor-trailers.

Some were carrying sheetrock, auto parts or rustic furniture, he said. The private security company he works for is responsible for checking the rigs of 10 transportation companies before they reach the Bridge of the Americas port of entry; it's one of half a dozen security providers hired by manufacturers to conduct independent inspections near the bridge entrance on the Mexican side.

"We’re like a repellent so that companies don’t get involved in organized crime," he said.

He questioned the motivation for the governor's increased state vehicle inspections. 

"Really it was a pretext because really a lot of money was lost," he said.

Long-term effects of border inspections, $15M daily in lost revenue

During the seven-day slowdown, El Paso saw truck traffic plummet at the city's two commercial crossings.

CBP processed 13,377 trucks at the Ysleta-Zaragoza port of entry in the six days through April 2 before state inspections began. That number fell 59% to 5,533 during the six days through April 9, during the height of the slowdown. At the Bridge of the Americas, truck traffic fell 55% from 3,394 to 1,530 over the same period.

Meanwhile, the Santa Teresa crossing registered a 50% gain as companies redirected shipments to New Mexico.

More:Sector Chief Gloria Chavez readies El Paso Border Patrol for end of Title 42, return of asylum

“The inspections did not uncover any narcotics shipments or human trafficking victims,” said Tom Fullerton, economics professor at the University of Texas at El Paso.

“Shielding Texas from ‘their unsafe vehicles’ and ‘their unsafe drivers’ is a wildly inaccurate objective," he said in an emailed response to questions. "The trucks and drivers from Mexico face the same regulatory requirements as those from the USA. The Texas state economy benefits from international commerce and gubernatorial policies should support it rather than impede it.”

He estimated the slowdown at the border cost El Paso about $15 million per day in local business losses. El Paso's Chamber of Commerce pegged losses in the range of $100 million to $150 million in revenue, based on member surveys.

“Transport company labor and fuel costs skyrocketed,” Fullerton said. “Many visitors decided to avoid crossing the border. Manufacturing output fell and has still not recovered from the supply chain disruption. Produce wholesalers lost valuable stocks due to rotting and spoilage. U.S. firms lost sales due to delivery delays.”

El Paso Chamber programs coordinator Mia Romero said many area businesses felt the sting.

“However, the agriculture and manufacturing sectors were most heavily impacted, as they represent a large portion of the local economy," she said. "Agriculture is arguably the most impacted industry, as their products are perishable.”

U.S. Rep. Veronica Escobar, D-El Paso, met with local stakeholders impacted by the bottlenecks at the border. The delays impacted their bottom lines from increased overtime pay, juggling to establish alternate routes and convincing truck drivers in Mexico to sit in line for more than 12 hours, she said.

“One of the really eye-opening comments I heard was that these corporations who are invested in our community, invested in our state, they have options. They can pick up and do businesses elsewhere," Escobar said. "Texas is beginning to look like an anti-business state.”

Analysts agreed that the economic repercussions could continue to rattle the area's economy.

Although the border inspections "were for a relatively short period of time and affected only a small portion of overall trade," Perryman said, "it appears that the longer term effects may ultimately be much more profound." 

Mexico's Economy Secretary Tatiana Clouthier warned that the country may redirect a major Mexico-to-Canada rail project through New Mexico. Mexico's Foreign Secretary Marcelo Ebrard later said he discussed new infrastructure investments at the Mexico-New Mexico border with U.S. Department of Homeland Security Sec. Alejandro Mayorkas.

"We can't leave all our eggs in one basket and be hostage to someone who would use trade as a political tool," Clouthier said at a conference in Mexico City in late April. 

Fullerton said he expects business bankruptcy and closure rates to increase in 2022 after the week-long hit to profit margins. Romero said businesses looking to relocate may now weigh the risk of a border slowdown in Texas.

“Collectively, we’re trying to onshore manufacturers and other businesses for resilience efforts, and this makes it more difficult for businesses knowing that borders can be shut down so quickly,” she said. 

El Paso companies in 'catch-up mode'

The city incurred about $125,000 indirect losses, according to David Coronado, managing director of the city's International Bridges and Economic Development department. He called the impact on city coffers "minimal" and said the private sector bore the brunt.

The El Paso ports of entry saw about $85 billion in trade last year, or roughly $120 million a day, Coronado said. During the two days of “complete gridlock” at the border — when Mexican truckers blockaded the ports of entry in protest — around $240 million in commerce was stunted.

Traffic has largely returned to normal at the border, he said, with companies now in "catch-up mode."

"We believe in security, we believe in securing our ports," Coronado said, "and at the same time helping industry and the regional economy.”

In Juárez, Carlos Ricardo González stood outside José Ortega's truck cab door on a Friday afternoon. The truck line at the Bridge of the Americas was slow, and the two men were shooting the breeze over the growl of idling engines.

González said he slept in his truck for two nights during the worst of Abbott's trade slowdown. Now, the truck line would occasionally become slow but it was moving. There was no new security on the Mexican side, he said. 

Ortega leaned out of his window with a paper labeled "Truck & Trailer Inspection Report."

"I have to pass through the K-9 inspection where they check that the trailer is clean," he said, pointing ahead to the private security kiosks. "It would be difficult to try to pass drugs or people. On the U.S. side, they put you through random X-ray exams as well."

Things had calmed down, but they knew their work could be interrupted by political winds anytime. 

"That's the life of a trucker," González said.

Adam Powell, an El Paso-based freelance reporter, contributed to this report.