Texas: Partial closure of the border with Mexico has caused losses of up to $10,000 million Multimillion-dollar losses There were also winners

Whether in El Paso, Laredo, McAllen or Eagle Pass, the economic blow of the partial closure of the border with Mexico for 16 months can be seen on the streets near the border crossings.

Metal shutters have replaced merchandise-filled windows at businesses in the centers of these border cities, without an announcement indicating when they will reopen. In Laredo, the phone lines of previously busy businesses are disconnected.

Once streets bustling with shoppers and binational commerce now look lonelier than at any time in the last decade, according to testimonials from merchants in those areas.

“It is very sad to walk and see businesses closed,” said Teclo García, director of Economic Development for Laredo, a city on the border with Nuevo Laredo. "It is what hurts the most, that we do not know if they will reopen or not."

According to research by José Iván Rodríguez Sanchez, an analyst at the Baker Institute Center at Rice University, the impact on the economy of the communities on the US side of the border amounts to some $10 billion in losses since the start of the pandemic in March 2020.

Furthermore, this number will continue to rise until restrictions on the US-Mexico land border—imposed to prevent the spread of covid-19—are relaxed and cross-border business resumes.

In the commercial areas of these cities, shoppers find shoes, boutiques for casual clothing and wedding and quinceañera dresses, perfume shops, fabric stores, and wholesale stores for buyers who cross from Mexico, whether they are citizens of both countries, permanent residents or visitors.

The economies of these border cities have depended for decades on many of these buyers, but restrictions on travelers crossing for 'non-essential' reasons slowed the economic spillover generated by the thousands of people who crossed from Mexico every day .

Without customers, businesses faced a choice: transform or close their doors.

Perfumería Laredo, a fragrance and perfume store located about two miles from the Juárez-Lincoln International Bridge in Laredo, was one of those businesses affected.

“It was ugly, we even had to close it,” said César Hernández, co-owner of the business. The perfumery closed for three months at the start of the pandemic and several of its employees were left unemployed.

“In our business, most of us are family,” Hernández said. "They understood that things were very bad and we had to put them out of work."

Once they reopened, the business faced another hurdle: its clientele changed. Despite the fact that most of their clients are from Laredo, according to Hernández, they lost all of their buyers from Nuevo Laredo, who could not cross due to the restrictions.

So they were forced to transform their sales model.

“Our Mexican clients couldn't come to the United States,” Hernández said. "So we had to find a way for us to reach them (and) to provide them with our products."

The perfumery now receives orders from Nuevo Laredo by phone and exports its merchandise. It uses international parcels, but sometimes the same customers find someone to pick up their order at the perfumery and take it to Mexico.

Rodríguez Sánchez, the researcher at the Baker Institute's Center for the United States and Mexico, has documented the effects of the closures and in December published a study in which he established that the greatest damage has been in the hospitality industry such as hotels and restaurants, in addition to other indirect activities related to the border economy.

He also estimated that at that time there were losses of $1.9 billion, just in retail businesses.

These losses have also affected the collection of sales tax (6.25%) mandated in Texas.

According to the study, the state has failed to receive around $500 million for this concept. Texas uses sales tax collections to fund public education, health care, public safety, and general state government spending.

This figure does not include additional taxes imposed by local counties, such as car rentals and entertainment.

Rodríguez Sánchez explained in his study that Mexican buyers also serve as an export industry for these counties.

“This retail export industry is important to the economies of these border regions, as it allows businesses to prosper and provides employment for many workers,” he stated in the study, for which he considered public data on the activity economy of border communities.

Statistics from the US Department of Transportation on border crossings offer evidence of just how severe the impact has been. From April 2020 to March 2021, the crossing of people traveling by vehicle from Mexico decreased by 50%, and the crossing of people on foot by 60.7%.

“Border businesses are facing an unprecedented crisis because thousands of people are no longer going to consume and that hits directly at the heart of these border communities,” Rodríguez Sánchez said in an interview. "And Mexicans are also losing because they went (to the United States) to buy goods that they got cheaper in the United States and now they have to buy them in Mexico at a higher price."

García, Laredo's director of Economic Development, said his city has not only captured 7% less sales tax, but also lost at least $7 million in revenue it received annually from tolling the bridge international.

“It has been a hard blow, especially for the businesses in the center of the city, those that are immediately near the bridge, which is a traditional part of Laredo,” Garcia said. “There are little shops, cafes, restaurants and other businesses that belong to families with a long time in Laredo and that now may be closed and then open or not anymore.”

García did not provide exact data on how many businesses have closed their doors.

The partial closure of the border also showed another side of the coin: that of those who won despite adverse circumstances.

For Lisa Plummer, financial director of Triple-S Janitorial and Pool Supplies, a business that provides materials for the construction and maintenance of swimming pools in El Paso, losing her clientele in Ciudad Juárez meant losing a significant part of the income of their business, as they were contractors with large swimming pool projects.

However, almost 16 months after the border closure, Triple-S now has more customers than in the 47-year history of the business, acquiring many new buyers in El Paso.

“Everyone was at home (due to “stay at home” orders) cleaning or remodeling and building swimming pools,” Plummer said. "It was crazy; we had an increase in sales of 25%”.

Plummer didn't lay off its employees, and now Triple-S's problem is meeting the increasing pace of product demand.

“Now I have increased sales and I can't get product,'' Plummer said. "Manufacturers can't keep up and supply us with the demand that's out there."

Technology repair business Tech Surgeons in El Paso was another that saw its clientele grow during the pandemic.

“Our customers who crossed the border couldn't cross the border anymore,” said Israel Cordero, co-owner of this business. “But thanks to the pandemic, our business thrived because everyone relied on technology” to work from home or tens of thousands of students connected to virtual classes.

Another factor was the need to communicate with loved ones through the Internet.

Like Plummer, the biggest obstacle Cordero has faced is a shortage of products and parts needed for his repairs.