Mexico may be ‘silver lining’ amid coronavirus crisis

Trinity Univ. economist: Disrupted supply lines in China could move to Mexico

With supply lines in China disrupted, a Trinity University economist sees Mexico as an alternative for U.S. companies.

SAN ANTONIO – U.S. companies are weighing whether to move their vital supply lines disrupted by the coronavirus outbreak across the border to Mexico instead of the other side of the world in China.

“Mexico is one of the few silver linings of the pandemic, potentially,” said David Macpherson, Ph.D., chair of the department of economics at Trinity University.

Macpherson said it would depend on how long the coronavirus crisis continues.

“If they think it’s long lasting, then they’re going to move,” he said. “Before it used to come by ship from China, now, it’s going to come by truck from Mexico.”

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But if such a move happens, Macpherson predicts it would be costly move.

“You have to set up a new plant. You got to hire workers. That all takes time and money,” he said.

For that reason, Macpherson said it’s doubtful those supply lines would return to China.

Macpherson said U.S. businesses would continue to save on labor costs, but also transportation, and through much lower tariffs under the new U.S. Mexico Canada trade agreement.

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Macpherson said not only would moving back to this hemisphere benefit Mexico with creation of more jobs, but also the Texas economy, and border cities, even San Antonio.

But again, he said, it depends on the what happens with the coronavirus.

“The key is how long is this going to last?” Macpherson said.

About the Authors:

Jessie Degollado has been with KSAT since 1984. She is a general assignments reporter who covers a wide variety of stories. Raised in Laredo and as an anchor/reporter at KRGV in the Rio Grande Valley, Jessie is especially familiar with border and immigration issues. In 2007, Jessie also was inducted into the San Antonio Women's Hall of Fame.