White House economic adviser Larry Kudlow said the "worst case scenarios" for the economic impact of a full closure of the U.S.-Mexico border "are off the table," but added that President Trump's threats to shut down ports of entry should be taken "quite seriously."
"The worst case scenarios are off the table for the moment," Kudlow said on "Face the Nation" Sunday.
Still, Kudlow said people, including the Mexican government of Manuel López Obrador, need to understand the president is not bluffing. "We're not there, but people should take it quite seriously," he added. "Mexico should take it quite seriously. This is a major issue."
Frustrated with an unprecedented surge ofheading towards the U.S.-Mexico border, Mr. Trump has recently made multiple threats to close down the border — a move economists have warned would be devastating to the American economy. According to an analysis by the pro-business U.S. Chamber of Commerce, approximately $1.7 billion of products and services flow across the southwestern border every day.
On Thursday, the president, pressured by members of his own party like Senate Majority Leader Mitch McConnell, seemed to back off the extraordinary measure, instead giving the Mexican government a one-year deadline to ramp up its immigration and drug enforcement and floating the idea of imposing tariffs on cars from Mexico.
Asked if the enactment of new tariffs could jeopardize the United States-Mexico-Canada Agreement (USMCA) — Mr. Trump's intended replacement for North American Free Trade Agreement (NAFTA) which has not been ratified by any of the three countries — Kudlow said he believes it would not interfere with the deal but that the administration does "have to set priorities."
"Sometimes you've got to make tough, short-term trade offs," he added.
Kudlow mentioned he's "optimistic" the trilateral trade agreement will be scheduled for a vote in Congress before 2020 and that it could pass the Democratic-controlled House. He said House Speaker Nancy Pelosi has been "very fair" and allowed U.S. Trade Representative Robert Lighthizer to brief Democratic lawmakers on the deal.
"It's completely up to her, but she's been quite cooperative so far, so I'm going to play this from the optimistic side," Kudlow said, referring to Pelosi.