"Closing the Border" itj Mexico--Another "Lose-Lose" Policy

I've stitched together (without cuts or corrections to any typos) Trump's tweets about "closing" the US-Mexico border.  I want to focus on one part of this (and I wish FB would let me highlight or bold  the text, but it doesn't, so I will pull that out):

“The DEMOCRATS have given us the weakest immigration laws anywhere in the World. Mexico has the strongest, & they make more than $100 Billion a year on the U.S. Therefore, CONGRESS MUST CHANGE OUR WEAK IMMIGRATION LAWS NOW, & Mexico must stop illegals from entering the U.S. through their country and our Southern Border. Mexico has for many years made a fortune off of the U.S., far greater than Border Costs. If Mexico doesn’t immediately stop ALL illegal immigration coming into the United States throug our Southern Border, I will be CLOSING the Border, or large sections of the Border, next week. This would be so easy for Mexico to do, but they just take our money and “talk.” Besides, we lose so much money with them, especially when you add in drug trafficking etc.), that the Border closing would be a good thing!”

(29 March 2019)

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"Mexico has the strongest [immigration laws--DC], & they make more than $100 Billion a year on the U.S...Mexico has for many years made a fortune off of the U.S...Mexico has for many years made a fortune off of the U.S...Besides, we lose so much money with them...that the Border closing would be a good thing!"

The only possible meaning of this has to be that the US exports a smaller value of goods and services to Mexico than we import from Mexico.  We have a "bi-lateral" trade deficit with Mexico.  And Trump is asserting that this means Mexico is making a "fortune" by trading with the US.

Let's start with the size of the balance of trade with Mexico.  (negative numbers, like -$81 billion mean a deficit--we're importing more than we're exporting, while positive numbers, like $+xx billion mean we're exporting more than we're importing).  So, what has out trade balance been with Mexico?  Here it is, annually, beginning in 2001.  (In Billions of current dollars--unadjusted for inflation.)

https://www.census.gov/foreign-trade/balance/

2001……..-$30 billion

2002………-$37

2003………-$41

2004………-$45

2005………-$50

2006………-$54

2007………-$75

2008………-$65

2009………-$48

2010………-$66

2011………-$65

2012………-$62

2013………-$55

2014………-$55

2015………-$60

2016………-$64

2017……….-$71

2018……….-$81 billion

Yep, deficits every year.  $100 billion or more in any year?  Nope.  Unless he doesn't mean *balance of trade*--he means IMPORTS.  (Which would really be crazy.)

Are persistent bilateral trade deficits a *bad* thing?  Nope.  Mexico produces things that we want, but that they can produce at a lower cost than we can.  So if we decided to import *nothing* from Mexico, we'd have to produce that for ourselves, and it would mean diverting resources from what we produce at a lower cost to producing things that would cost us more.  And that would make us worse off.  And make no mistake about it--we've been at or near full-ish employment for most of this period, so we haven't had a lot of idle workers or capital equipment sitting around.

We actually run persistent trade *surpluses* with come countries--Australia is one.

The point is that voluntary trade between people, between businesses, between countries is, generally, a good thing.  (That doesn't mean everyone always "plays fair.)  So, in general, if we stopped trading with Mexico, we'd be worth off.  If we stopped trading with Australia, we'd be worse off. 

But Trump does not see trade as a potential (and usually actual) benefit for both parties (countries, businesses...).  He sees things as zero-sum interactions--for me to "win"--for me to become better off--you have to "lose"--become worse off.  What economists think (and it's always possible we're wrong, but I doubt it) is that most trades have to be wins for both parties. 

We--the US--wins by trading with Mexico.  Australis wins by trading with us.  What Trump wants to do when he talks about closing the border--which really means closing ports of entry--has little or nothing to do with immigration.  It has to do with trade.  What Trump will do if he closes the border is shoot the US our collective foot *and* shoot Mexico in its collective foot.   Keeping the ports of entry open is not we lose, Mexico wins.  Closing the border is not we win, Mexico loses.

Closing the border is a lose-lose thing to do.  But Trump seems to be good at that.