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Tariffs on Mexican Products Will Not Curb Migration from Guatemala, Honduras, and El Salvador; Prosperity Will

Summary:
President Donald Trump’s threat to impose across-the-board tariffs on Mexican imports is aimed at reversing alleged Mexican inaction in stopping the flow of migrants from Guatemala, Honduras, and El Salvador—known as the Northern Triangle—into the United States. This measure, which would raise the costs of 6 billion in imports, would not only violate international trade obligations, it is also the wrong tool to stop the flow of immigrants. Increasing prosperity in Northern Triangle countries would directly address one of the root causes of migration. US immigration patterns are changing The increased Northern Triangle migration highlights several changes in US immigration trends. First, it takes place in the context of historically low levels of total immigration to the United States.

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President Donald Trump’s threat to impose across-the-board tariffs on Mexican imports is aimed at reversing alleged Mexican inaction in stopping the flow of migrants from Guatemala, Honduras, and El Salvador—known as the Northern Triangle—into the United States. This measure, which would raise the costs of $346 billion in imports, would not only violate international trade obligations, it is also the wrong tool to stop the flow of immigrants. Increasing prosperity in Northern Triangle countries would directly address one of the root causes of migration.

US immigration patterns are changing

The increased Northern Triangle migration highlights several changes in US immigration trends. First, it takes place in the context of historically low levels of total immigration to the United States. From a 45-year low of approximately 304,000 apprehensions of migrants of all nationalities at the southwest border in 2017, the number increased to 397,000 in 2018, which was comparable to the annual average for the southwest border[1] during 2009–18. Second, the national origins of immigrants are shifting. Immigration from Mexico, which accounted for almost all migration flows to the United States at the beginning of the century, has plummeted (see figure 1). Conversely, immigration from Northern Triangle countries, which started to increase in 2012, reached 52 percent of southwest border apprehensions in 2018 (see figure 2). Third, the type of migrants apprehended has also changed. Whereas in the past, single adult males represented over 90 percent of apprehended migrants, now most of them are families and unaccompanied children, asking for protection from violence and crime.  And fourth, the number of affirmative asylum applications from nationals of Northern Triangle countries has increased from 3,523 in 2012 to 31,066 in 2017, an almost 800 percent increase. More than half of the applications were from unaccompanied minors.

Figure 1 Immigration from Mexico has plummeted

Figure 2 US Border Patrol apprehensions for Mexicans have dropped, while apprehensions of Northern Triangle citizens have increased

Migration falls when incomes rise

Migration is a complex phenomenon. The immigration  literature shows that there is an inverse relationship between economic development and migration (Clemens 2014). It is not until countries achieve a certain income per capita, around $8,000, that migration flows begin to cease. Illegal Mexican immigration into the United States fell sharply around 2005, when Mexico’s GDP per capita hit the $8,000 mark.[2]

The Northern Triangle countries still have a long way to catch up with Mexico. In 2017, GDP per capita was $3,889 in El Salvador, $4,471 in Guatemala, and $2,480 in Honduras (see figure 3). This roughly implies that for migration to slow down, El Salvador and Guatemala would need to double their respective per capita incomes, while Honduras would need to more than triple its own. Looking at potential growth trajectories for these countries, this is a tall order.

Tariffs on Mexican Products Will Not Curb Migration from Guatemala, Honduras, and El Salvador; Prosperity Will

According to the International Monetary Fund (IMF), potential growth for Central American economies is projected to remain at 4 percent on average during 2015–20 (and this estimate includes other countries in the region that have posted higher growth rates in the past and have brighter prospects). So, were the Northern Triangle countries to manage sustained annual growth rates of 4 percent—which is feasible for both Guatemala and Honduras but more challenging for El Salvador—it would take El Salvador and Guatemala some 17 to 18 years to achieve the mark of $8,000 of income per capita and a few more years in the case of Honduras.

Increased prosperity for Northern Triangle countries is key to tackling migration issues

To accelerate their growth rate, these countries need policy interventions and significant public and private investments in infrastructure, connectivity, and education and skills, among other factors, to increase private sector opportunities. The region furthermore needs to strengthen its ability to cope with and manage its high vulnerability to natural disasters. These interventions must promote inclusive growth in order to create good formal jobs, reduce poverty, and allow for broad-based development. Increased prosperity is only feasible if security challenges associated with illicit drug trafficking and gang violence are addressed in parallel, while strengthened governance, through improved rule of law and anti-corruption actions, takes priority. In tackling these underlying causes of migration, US assistance plays an important role, which is why President Trump’s decision earlier this year to cut off an estimated $700 million in aid to the three countries is worrisome.

A more prosperous, secure, and well-governed Northern Triangle is possible, but that transformation will take time—far more than a decade. Transition measures are thus required to accommodate migration flows as economic development takes place. And Mexico, for sure, has an important role to play. Just last December, the United States and Mexico committed to expand bilateral cooperation to foster development and increase investment in southern Mexico and Central America to create a zone of prosperity. Moreover, President Andrés Manuel López Obrador has been promoting a “Marshall Plan” that would see some $20 billion in private investments directed at the southern part of Mexico and the Northern Triangle countries, which in turn would strengthen Mexico’s capacity to absorb larger immigration flows from its Central American neighbors.

Increased tariffs on Mexican goods will not help. Instead, tariffs will increase trade costs, unravel supply chains, deter investment, and increase prices for US consumers.  Escalating duties will also erode the US negotiating position with other trading partners, as they see the United States renegade on agreed rules. It is possible tariffs may force Mexico into stepping up enforcement actions at its southern border.  But one thing these tariffs will not achieve: stopping migrants from Guatemala, Honduras, and El Salvador. That will only happen when they can find economic opportunity in their own countries.

Notes

1. Most illegal immigrants (98 percent in 2018) enter the United States through the southwest border.

2. Mexico’s fertility rates also declined at that time.

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