The true cost of a wall may ultimately fall on small business owners

The true cost of a wall may ultimately fall on small business owners
Alfredo Gomez stands in the sunroom at Casa Fiesta, one of the two restaurants he owns in Richmond, Ky., on Sunday, February 5, 2017. Gomez, who still has family members living in Mexico, hopes that the Trump administration will consider other avenues of financing a physical wall along the Mexican border, as a 20 percent tariff on Mexican imports could greatly affect his business. (Photo by Tricia Fulks Kelley)

Alfredo Gomez moved to America 23 years ago. The owner of Casa Fiesta and Casa Café has raised three boys in Richmond, Kentucky, a town of approximately 35,000 people.

“I like the way my family grows here,” Gomez said.

He has made a life for himself in Central Kentucky and is proud of his restaurants’ success. While half of his family, including his mother and siblings, remain in Mexico, Gomez believes if he had stayed there, he wouldn’t be as fruitful as he is in America.

“For me, I’ll stay here forever.”

Since Donald Trump became President of The United States, he has signed 18 executive orders and memos in his first 17 days in office. One order, in particular, signed January 25, vows to improve border security and immigration with the construction of a physical wall along the Mexico-United States border.

During his campaign, Trump promised supporters that the wall would cost U.S. taxpayers nothing, even going so far as to say that Mexico will foot the bill.

However, as tensions rise between President Trump and Mexican President Enrique Peña Nieto over paying for the wall, House of Representative members offer up a solution. White House Press Secretary Sean Spicer said part of a “buffet of options” for wall financing is a 20 percent tariff on imported Mexican goods.

Gomez relies on Mexican products for his restaurants, but he is also involved with an avocado farm in Michoacan, Mexico, a state south of Mexico City. He said his partner in the organic operation is uncertain of the fruit’s future.

“[My partner] was looking to send them to the U.S., but I don’t know about now,” Gomez said. “I think [this tax is] going to affect everyone…Who’s going to pay for it? We’re going to pay for it.”

Now, Gomez’s partner is considering exporting his avocados elsewhere, like Canada or Taiwan.

Gomez believes President Trump is a “smart guy” who can come up with a better solution. Though he’s aware of the negative preconceptions many people hold about undocumented individuals, Gomez knows several who are genuinely “good people.”

“You come here, you can live better,” he said, noting why many escape the cartels in Mexico.

Gomez said he plans to continue to buy his produce for his restaurants at a good price. He has customers who depend upon affordable prices.

“If prices go up, it’s going to be not too good.”

Economic experts have been vocal about issues with such a tax, from increased prices on goods to implementation.

Dr. Gyan Pradhan, professor of economics at Eastern Kentucky University (EKU), said the tariff essentially taxes U.S. consumers.

“The consumers are really the ones who will be paying for this wall,” Pradhan said, calling the plan “backwards.”

“Free trade is touted as beneficial, making the market more efficient. When you have an efficient market, both producers and consumers make mutual gains as demand increases,” he said. “Any kind of restriction on trade would be detrimental to U.S. consumption, trade volume and existing and potential trade agreements. I think it’s shortsighted on a number of levels – economically speaking.”

Austin Shearer, an EKU student, said while he has stayed up-to-date with actions of the Trump administration, he admittedly hasn’t thought much about the repercussions of the proposed tax on the U.S. economy.

While the tax isn’t a set policy for funding the wall, Shearer worries about threats of illegal immigration.

“It seems a little bit of a gray area,” he said. “… I don’t want [this tax] to hurt our economy, but it seems that drugs and what comes with that also hurt our economy and our people.”

Trump won the Commonwealth of Kentucky in the general election with 62.5 percent of the vote.

According to Fahe, a collaborative network in Berea, Kentucky, working to eliminate Appalachian poverty, the Appalachian Regional Commission estimated Kentucky had the worst poverty rate in the 13-state region. At 25.4 percent, Kentucky’s Appalachian communities saw 6.5 percent higher poverty rates than the rest of the state between 2010 and 2014.

Mark Lynn Ferguson, editor of the Revivalist, worries that Mexico could reciprocate trade restrictions, noting Mexico’s purchase of coal from the U.S. In 2015 and 2016 Mexico bought 5.3 million short tons of coal from the U.S.

“The 20 percent tax, of course, threatens to drive up prices on many products, ranging from produce to cars,” Ferguson said in an email interview. “It’s no secret that Appalachia has some struggling areas. That’s not the kind of blow they need right now. It’s hard to see how any of this could be good for the Appalachian economy.”

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