Trucks line up to cross into the United States at the border in Tijuana, Mexico, Friday, June 7, 2019. Companies have been rushing to ship as many goods as possible out of Mexico to get ahead of possible tariffs threatened by President Donald Trump, hurriedly sending cars, appliances and construction materials across the border to beat Monday’s deadline. (AP Photo/Hans-Maximo Musielik)

Companies in sprint to ship goods from Mexico before tariffs

June 07, 2019 - 6:52 pm

TIJUANA, Mexico (AP) — Companies are rushing to ship as many goods as possible out of Mexico to get ahead of the tariffs threatened by President Donald Trump, hurriedly sending cars, appliances and construction materials across the border to beat Monday's deadline.

Mexican-made tiles are piled up on the pavement next to a warehouse in New Mexico. A furniture factory and a jalapeno exporter are fretting about a huge financial hit next week. And hundreds of semi-trailers carrying medical devices, televisions and Toyota pickups idled in line Friday at the truck crossing in Tijuana.

Even before the tariff threat, Tijuana shipped $80 million worth of goods across the border every day. Now companies are spending millions to hire freight carriers and secure warehouse in the U.S. in a massive shift of inventory over a matter of days.

"You see these supply chain-managers on a tear, just bringing stuff in as fast as they can," said Jerry Pacheco, president of the Border Industrial Association in Santa Teresa, New Mexico. "Almost every major supply-chain manager who is bringing stuff from Mexico is scrambling to get their stuff across the border as quickly as possible."

Trump says he will impose 5% tariffs on all goods imported from Mexico starting Monday unless the country does more to stop the flow of Central American immigrants into the U.S.

The White House and Mexico representatives have been meeting in Washington in hopes of coming up with a deal that satisfies the president and averts the tariffs. Many Republicans in Washington oppose the tariffs because they fear rattling the economy. It's unclear how companies would pay the duties.

Sandra Maldonado, who provides legal consulting services to manufacturing plants about trade rules, said one of her clients is a furniture maker who would lose $1 million a day under the tariffs.

"There's so much uncertainty. Not even the secretary of the economy can tell us what the future holds," she said. "It's totally absurd."

She wonders whether it will affect all goods and if that would be a violation of Mexico's existing free trade agreement with the U.S.

Franz Felhaber, a customs broker fretting about chili exports, calculated that the tariffs will cost $35,000 for the 100 trucks that cross each day at the height of jalapeno-export season, which starts in a few weeks. Exporters have to pay duties upfront — a practice that threatens their cash flow, even if they pass on the costs to consumers.

He calculates that if tariffs are ramped up to 25% by October, as Trump has threatened, two-thirds of his clients will go out of business.

The tariffs were the topic of conversation at an import-export convention planned months ago called "Foreign Trade and New Opportunities" Friday south of Tijuana in the beach town of Rosarito, where presenters tried to calm nerves.

Speakers talked about looking at other export markets, but they also acknowledged the challenges in moving away from the U.S., Mexico's largest trading partner.

"We need to start looking to see how we fight to get back that 5% if it happens," said Luis Manuel Hernandez, head of Index Tijuana, an association of manufacturers in Baja California whose members include Toyota, Hyundai and other major corporations. "Maybe we become 5% more competitive."

Customs brokers have been flooded with calls from Mexican clients asking about what to do, said Myrna Aguilar, president of the San Diego Customs Brokers Association and a brokerage operations manager at Casa International, one of the largest brokerages on the border.

"Nobody runs their business on a day-to-day, minute-by-minute strategy so this has created a little bit of turmoil," Aguilar said.

She said the mood by some companies is somber, especially for businesses such as those in the medical device industry that have never had to pay duties.

"We're telling them ship as much as you can between now and Sunday, protect whatever you have already, move it fast," Aguilar said.

She expects the influx of goods into the US from Mexico to climb through the weekend. Her company has already had to find 25% more warehouse space for clients.

Though companies have known about the jump in tariffs for more than a week, many had hoped that the deadline would be postponed or that the hike would not happen at all.

"The major companies, especially those that tended to carry some inventory in Mexico, they're going to push it out."

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Attanasio reported from El Paso, Texas.

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