There is likely no border as important for international trade as the US-Mexico border. Yet, in recent months, that same border has become a subject of controversy given the rise of asylum requests and encounters with immigrants. As the US heads for a presidential election, politicians across party lines have made the border a crucial topic of discussion. For trade, this begs an even more important question: can the world’s most prominent trade route withstand an influx of immigration?

We found some evidence that such is actually the case. We looked at the two largest border crossings in the US—Laredo and El Paso—and found a shocking fact. While Laredo was able to recover, to some degree, after the COVID-19 pandemic in terms of commercial border crossings, El Paso struggled to do the same. In fact, we found some initial evidence that El Paso’s trade struggles might be linked to a saturation of border patrol activity given the increased influx of migrants in 2022 and beyond. But more on that later.

Let’s start by recognizing the sheer magnitude of the border when it comes to trade be it imports or exports. We can look at trade data from last year gathered by Hunt Institute at UTEP to get an idea of the sheer size of border crossings in the US-Mexico relationship. In 2023, the totality of goods traded between the US and Mexico equaled some $798 bn—for context, Mexico’s entire GDP for 2022 was some $1.4T. That same year, it is estimated that land trade in the US-Mexico border totaled $581 bn. That is, roughly 86% of all trade between the two countries, and higher than the GDP of all but 25 countries in the world. This makes the US-Mexico border a strategic asset as the US seeks to relocate factories away from China to countries closer to consumers.

US-Mexico Trade Value (2019)

(Data from U.S. Census Bureau and UTEP’s Hunt Institute)

Often, however, that same trade shares a physical space with people attempting to enter the US. One can think of it in terms of a limited supply and an increased demand. Both people and trucks full of goods are hoping to enter the US through shared border crossings, now with asylum requests reaching as much as 10,000 per day. At some point, some cities were likely to reach a point of saturation.

At least, in theory, one would expect such a point to arrive today given the large increase in recent years of immigration to the US. Just in the last three years, encounters with illegal immigrants at the US Mexico border jumped from little above 78 thousand to nearly 301 thousand in September of 2023—nearly a four-fold increase. This, in great part, comes from increased instability around the world including conflicts in the Middle East, the rise in Civil Wars across the African continent, and broad instability in South America.

Encounters with Immigrants at the US-Mexico Border (2021-2024)

(Data from U.S. Customs and Border Protection)

Now, if we turn our attention to the US-Mexico border we might be inclined to believe that rising immigration has had little to no effect on the outlook of border crossings. Although vehicle crossings are now lower than they were in 2018, there is no sign of a nationwide decrease in the last three years as immigration has grown into a topic of national concern. If anything, the sudden collapse of vehicle crossings in 2020 is likely the result of COVID-19 and not of increased immigration.

Total Vehicle Crossings in the US-Mexico Border (Trucks, Buses, Trains, and Personal Vehicles)

(Data from U.S. Department of Transportation)

So, at least in the aggregate, immigration seems to have no impact on trade. The problem, however, emerges when we look at individual ports and listen to their stories.

US-Mexico trade is consolidated across a handful of access points. In fact, just the two largest border crossings represent 52.72% of all land trade between the two countries: Laredo, which represents 39,4% of the value of land trade, and El Paso, accounting for an additional 13.28%. Otay Mesa in California comes in a close third with 10.7% of the total.

Trade Value of US-Mexico Border Crossing Points in Billions of USD (2023)

(Data from UTEP’s Hunt Institute)

These two cities, as it turns out, are also a perfect case study to understand the impact of immigration to international trade. Both cities have been hit by the rise in immigration and influx of asylum seekers to the US, but they have been impacted to different degrees. On the one hand, Laredo reports as many as 500 more immigrants per day which is a considerable increase but fails to be above national averages. If we consider that between 2021 and 2023 monthly illegal crossings grew by roughly 223 thousand, that would equal some 7.4 thousand additional crossings per day. Furthermore, we know that out of the 43 vehicle crossings in the US, only 15 are major crossings for vehicles and are likely to consolidate the influx of migrants. On average, we would then expect that the 7,6 thousand additional migrants would be divided across those 15 entry points to equal some 493 additional migrants per day per port or just below Laredo’s current numbers. 

El Paso, on the other hand, has experienced a far larger influx of immigrants, with an estimated over 2,000 more immigrants per day entering the city. This has made El Paso one of the the epicenters of the great US immigration surge.

Thus, we can think of Laredo and El Paso as a natural experiment of sorts. Both cities are considerable when it comes to trade—although Laredo has considerably more trade than El Paso. But El Paso has received a larger flow of immigrants than Laredo.

On a broad level, when looking at the total number of crossings, we’d be once again inclined to see no meaningful difference between the two cities. Both saw a meaningful collapse in border crossings during COVID—although El Paso’s was far greater—and have been recovering ever since.

Total Vehicle Crossings at Laredo and El Paso (2019-2024)

(Data from U.S. Department of Transportation)

However, total border crossings is not the best metric for trade. In it, we include crossings of personal vehicles and buses which transport little to no cargo at all. If, instead, we look at container trucks, we see a completely different story. While both Laredo and El Paso saw a considerable drop in truck crossings in 2020 as the COVID-19 pandemic entered full swing, Laredo managed to recover soon after while El Paso remained at a fairly low level ever since.

Truck Crossings at Laredo and El Paso (2019-2024)

(Data from U.S. Department of Transportation)

This, in fact, lines up with the first increases of immigration to the US that roughly began at the onset of COVID. The City of El Paso itself goes further back and recognizes the migrant crisis beginning in 2018 with the current upsurge starting in 2022. This, in turn, has forced customs agents to refocus on handling the large influx of migrants instead of looking at cargo. This, in turn, has likely pushed trucking companies to seek alternative entries to the US and forced many to ask when their shipments would arrive to their end destination?

One needs only look at the patterns amongst the cargo trucks that still use El Paso as a destination. The large shift during COVID was not just that El Paso lost trucks, but that it lost containers full of cargo. Since mid-2020, the number of empty containers crossing in El Paso has been larger than the number of full containers, likely suggesting that trucking companies prefer to use the city as a place to exit their empty cargo instead of as an entry point to the US market.

El Paso Truck Container Crossings, Empty and Loaded (2019-2024)

(Data from U.S. Department of Transportation)

This, of course, is not an econometric study: it is merely a comparison of the two largest border crossings between Mexico and the US. However, in and of itself, it is already telling of a meaningful pattern. While Laredo, with a lesser burden from immigration has been able to maintain high levels of truck trade, El Paso, with a higher degree of immigration, has not. 

Imagine, for once, that after the COVID-19 induced collapse in truck traffic, El Paso had experience Laredo’s monthly growth rate in border crossings instead of its own. If we were to model this scenario, we would discover that, today, El Paso would have over 6,400 additional truck crossings per month than currently is the case—roughly equivalent to 57% of El Paso’s real truck traffic. In fact, plotting this graph shows that El Paso had similar growth Rates to Laredo until the end of 2021 and beginning of 2022 when, as we previously mentioned, the city of El Paso first estimated the current wave of immigration first began.

Truck Crossings at El Paso - Real vs Projections Based on Laredo Growth Rate (2019-2024)

(Data from U.S. Department of Transportation)

Given limited resources, and an increased demand to cross the border, it was only natural that some ports would be overrun. Nationwide, immigration seems to have no considerable effect on trade, but, for cities like El Paso, it could be the biggest challenge to local economies subsistent in cross-border trade. If ignored, El Paso could continue to lose some 6,400 trucks worth of cargo every month when compared to other border crossings. A gap that could only grow in coming months.