The uncertain future of two U.S. border towns that thrived off trade
Elizabeth Findell and Jeanne Whalen
Updated 9 min read
At the country’s busiest border crossing for trade, in Laredo, Texas, the lines of semitrucks stretch for miles. The vehicles, which ferry goods and materials across international bridges between Mexican factories and U.S. consumers, drive nearly the entire economy in this southern border city of 257,000.
Some 1,400 miles north, similar dynamics are at play in Detroit, at the nation’s busiest trade crossing with Canada, where the auto parts that drive Motor City travel back and forth between U.S. and Canadian plants.
Laredo and Detroit, perched on the borders of the U.S.’s biggest trading partners, are on the front lines of the nation’s post-Covid-19 trade economy. That economic order is likely to be disrupted by President-elect Donald Trump, who has pledged to place 25% tariffs on Canada and Mexico on the first day he takes office. This week, Trump ratcheted up the rhetoric, suggesting that steep tariffs on Canada would force it to submit to annexation by the U.S.
Trump, partly because of his own efforts to remake trade in his first term, enters a vastly different trade economy from the one he left in 2021.
In the past two years, Mexico has become the largest exporter of goods to the U.S., sending merchandise worth roughly $480 billion in 2023. China, which was the top exporter during Trump’s first term, has fallen from providing some 21% of the nation’s imported goods in 2018 to around 13% now.
The post-Covid uptick in nearshoring, alongside other factors, has helped transform Laredo, long a major South Texas port, into a heavyweight in global trade. Detroit, meanwhile, is expanding its already brisk automotive trade with Canada as new electric-vehicle and battery plants crop up on both sides of the Detroit River.
Hundreds of trucks move daily through a single 480,000-square-foot warehouse north of Laredo. Glass and aluminum go into Mexico; bottles of Modelo and Corona come back. Car batteries and other automotive parts go south; cars come north. Clothing, construction, railroad and medical supplies fill shipments.
“It’s everything you can think of: toothpaste, mops, dryers, TVs,” said Ermilo Richer, owner of the Richer logistics, warehousing and customs business.
Richer, who voted for Trump, said he sees Trump’s tariff threats as a kind of negotiating tactic. He said Trump is too smart to take a hatchet to the economy of Laredo, let alone consumers across the country, who would almost certainly see prices jump as a result of tariffs.
Still, he and others who work in trade are doing what they can to prepare. They are checking to see if they have the cash flow to make it through an initial period with tariffs, which would likely cause a drop in demand for imports. “A 2% tax is one thing, a 20% tax is just—that’s hard to put out there,” he said.
Goods have flowed through the U.S., Mexico and Canada mostly tariff-free since passage of the North American Free Trade Agreement was ratified in 1994, which was replaced during Trump’s first term with a similar U.S.-Mexico-Canada agreement.
Trump’s 2018 tariffs on Chinese imports helped propel the shift to Mexico. So did the Covid-19 pandemic, as shutdowns among Asian factories prompted hundreds of U.S. companies to move manufacturing closer to home.
Since then, many U.S. companies have followed suit. BBVA, Mexico’s largest bank, started a unit in 2023 aimed at helping U.S.-based companies move part of their overseas operations to Mexico. The effort brought in some 270 new customers, said Victor Rojas, who heads the bank’s Houston office. But many have put plans on hold with news of the potential tariffs.
In 2023, Laredo surpassed Los Angeles and Chicago as the biggest port in the country by trade value, crossing nearly $320 billion in goods. About $173 billion in goods crossed through the Detroit port that year.
At least five land ports with Canada or Mexico have been approved for new construction or expansion, including two in Laredo, and several others are at various stages of construction, including in Detroit.
In Laredo, the boom in trade that has accompanied the nearshoring is felt on nearly every corner, where tens of thousands of trucks line roadways daily. With them have come new restaurants and stores and expanded infrastructure for many importers.
With those facilities have come new people—working, spending money and buying houses, said David Stedman, local economic-development coordinator, who said there has been a “multiplier effect” from nearshoring.
An employee of logistics company Richer inspects steel that crosses the border at Laredo, Texas. - Christopher Lee for WSJ
“All the cities on the border have benefited from that, but no one has benefited more than Laredo,” he said.
Alvilda Ligenza and Fernando Hernandez opened Borderland Espresso & Gifts three years ago amid Laredo’s boom. The shop, which features lime-green walls and tables decorated with Lotería cards, has gained a strong following, from neighbors and truckers alike, and last year was voted best coffee by readers of the local paper.
The shop’s owners worry that tariffs will force them to raise prices on the coffee they import from Mexico—and could otherwise hurt Laredo’s economy.
“A business like ours is a luxury,” Ligenza said of specialty coffee. “When people need to dial back costs, we always seem to be first on the chopping block.”
Nafta opened the door to Americans’ year-round obsession with avocados. Per capita avocado consumption is now six times what it was in the ’90s, and the share that is imported has gone from 10% to 90%. More than 80% of U.S. avocados come from Mexico, according to the U.S. Agriculture Department. Mission Produce, one of the country’s top avocado importers, built a 265,000-square-foot cold-storage facility through which nearly half a billion avocados pass annually.
When it was constructed three years ago in a swath of land northwest of Laredo, nothing was nearby, said Jake Rice, the facility’s local manager. Now it is part of a sprawling industrial park, surrounded by facilities that each bring in hundreds of trucks a day. So heavy is the truck traffic that it can take Rice an hour and a half to drive the 10 miles home. He also has had to adjust employee work schedules.
Along the U.S.’s northern border, few places have more at stake in a possible trade battle than Detroit. The city is home to the industry most likely to get slammed by tariffs—the auto sector—and to a 100-year-old bridge that is the nation’s busiest trade crossing with Canada.
Trade traffic over the Detroit River has been so brisk that a second bridge is nearing completion about 2 miles south, named after Canadian hockey star Gordie Howe.
In the years since Nafta, Detroit’s Big Three automakers—Ford, General Motors and Stellantis—established a complex web of manufacturing on both sides of the border. That trend has accelerated in recent years as Canada offers EV manufacturers hefty incentives to locate operations there.
John A. Evans runs a logistics company, Evans Distribution Systems, near the riverfront, where seagulls circle over miles of warehouses. The family-owned business mostly handled Canadian whisky and cigarettes when Evans was a child, but these days auto parts dominate his warehouse shelves.
As EV production ramps up, Evans’s warehouses will process battery components several times as they cross the border before finally being installed in vehicles in Ontario—vehicles that often will return to the U.S. for sale, Evans said. Hitting those goods with a 25% tariff at each crossing would wallop automakers, he said.
“You worry a lot about these auto companies because they’ve now made big investments in batteries—billions and billions of dollars—and more shifts are going to be tough financially,” he said, adding that the damage would likely trickle down to his business.
In the short term, Evans said, there could be some benefits to his business if new tariffs increase companies’ demand for foreign-trade-zone warehousing, a kind of U.S.-based storage used before tariffs are imposed. For example, the last time Trump hit Chinese goods with new tariffs, one importer used Evans’s FTZ space to sort through components and discard any broken parts before paying tariffs on them, Evans said. Other importers might use the FTZ to assemble food and beverage items into gift bags that would carry a lower tariff rate than the individual items alone, he added.
Down the street at Ideal Group, a family-owned manufacturing and construction company that helps build auto factories, top executives grimaced when asked about import tariffs from Trump’s first term. The levies caused steel prices to rise, making it hard to plan big construction projects and to deliver them on budget, said Jesse Venegas, vice president and son of the company’s founder.
“Nobody likes to see prices go up. But not being able to predict them and the volatility associated, that’s what drives the biggest concern for me,” Venegas said.
From his office windows, Venegas can see the new bridge, which he hopes will spark development of more warehouses and other facilities in the area after it opens later this year. “I think as long as we value not having a tariff war with Canada, I think it’s going to work out well,” he said.
Some workers say they would welcome more tariffs if it meant bringing manufacturing jobs back to the U.S. At a truck stop on the outskirts of Detroit, where drivers rest and refuel before heading into Canada, mechanic Dean Schwartz said he supports Trump’s tariff threats.
“He wants all of them jobs back here,” said Schwartz, who spent 26 years as a truck driver before getting into repairs. “It’s the way it should be.”
