Economics
America’s southern border has become a global crossroads
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SOME MIGRANTS huddled in tents provided by local volunteers. Others slept on the desert floor, facing fire pits burning rubbish. The camp, which in 2023 sprang up outside Jacumba Hot Springs, a town in San Diego County, California, was encircled by mountains, highways and the border wall. When Border Patrol agents came to take people for processing, they had to resort to nonverbal communication. “Sit if you have a passport.” “Step forward if you are travelling with children.” If the migrants were from Mexico and Central America, as most used to be, Spanish would suffice. Yet among those who had just walked across from Mexico were people from China, India and Turkey.
Last year seems to have set records for the number of migrants apprehended at the southern border, and Republicans in Congress are demanding reforms to America’s asylum system in return for aid to Ukraine. A deal has proved elusive. Slightly more under the radar, the diversity of the Jacumba camp reflects a big change in who is crossing over. In fiscal year 2023, for the first time, migrants from places beyond Mexico, El Salvador, Guatemala and Honduras made up more than half of all those apprehended at the border (see chart 1). Venezuelans are the largest part of this group. But last year 43,000 Russians, 42,000 Indians and 24,000 Chinese also made the crossing—up from 4,100, 2,600 and 450, respectively, in 2021. America’s northern border has proved porous, too. In total some 40,000 Indian and Chinese migrants came south from Canada last year.
Migrants take different paths to the southern border, depending on where they come from. An analysis by Idean Salehyan and Gil Guerra of the Niskanen Centre, a think-tank in Wasington, DC, suggests that most Chinese fly to Ecuador, to which they have visa-free travel, before making the long and dangerous trek through Panama’s Darién Gap. Panamanian data confirm that the number of Chinese migrants crossing the jungle rose steadily in 2023. In October, El Salvador began to tax African and Indian travellers at the country’s main airport. Turkish migrants in Jacumba had flown to Tijuana and then walked into California.
Certain nationalities tend to cluster in specific border sectors. Chinese and Russians often cross near San Diego and Indians near Tucson, Arizona. Migration flows are constantly evolving, says Ariel Ruiz Soto, of the Migration Policy Institute, a think-tank. He likens the border to a balloon. If you squeeze one side (say, enforcement increases in San Diego), the air will flow to another (migrants will head to Tucson or El Paso.) Social media and messaging apps have helped spread information. TikTok and YouTube are filled with videos teaching migrants about routes. “Once families know that their friend or cousin has made it,” says Mr Ruiz Soto, “they’re much more likely to take a chance.”
Smuggling networks have evolved to serve the increased demand. Notices painted on walls and printed on fliers all over the Indian states of Punjab and Gujarat promise help with moving to America, Australia, Britain and Canada: visa services, college admissions, job opportunities. A charter plane bound for Nicaragua and filled with Indian migrants was recently grounded in France while officials conducted a human-trafficking investigation. The Turks in Jacumba admitted they had paid a coyote to show them the way to a hole in the border wall. Mexican cartels are also diversifying their enterprises by getting into the people-smuggling business.
Why the surge? A number of trends converged in 2023 to diversify irregular migration to America. War and instability pushed people to leave their countries. The Jewish Family Service of San Diego, which runs a migrant shelter, helped more Russians than any group besides Mexicans in the nearly two years since Russia invaded Ukraine. The end of China’s lengthy and repressive zero-covid policy allowed Chinese to travel internationally again.
Several Republican politicians have suggested that China is sending spies to infiltrate America. It is not lunacy to be wary of potential agents working for Chinese security services. Last year the Department of Justice charged two Chinese men living in New York City with operating an illegal police station “to monitor and intimidate dissidents”. Yet Mr Salehyan argues that there is no evidence that asylum-seekers, who willingly give themselves up to Border Patrol, have sabotage in mind.
Roughly 70% of asylum applications from Chinese migrants between 2003 and 2023 were granted, suggesting that their reasons for leaving China were mostly credible (see chart 2). In fact, Ecuadorian data show that a disproportionately high share of Chinese migrants are coming from Hong Kong, where dissent has been punished, and Xinjiang, where Uyghurs have been persecuted. Rather than plotting to undermine America, plenty seem to be seeking freedom.
But many, probably most, migrants have a financial incentive to come. Several at the camp in Jacumba said they were fed up waiting years for a visa, and hoped to earn more money in America than back home. As of December, more than 300,000 people who had submitted immigrant visa applications were waiting for an interview. Delays are largely the result of the pandemic, which shut down consulates and decimated their staff. More important, there are not nearly enough visas for the number of people who want to come. Yet expanding legal pathways has not, so far, been part of Congress’s spasmodic negotiations.
This increasingly global migration to America’s borderlands says something about the enduring power of the idea that America is a land of opportunity. For many migrants in Jacumba there is no other place that they would risk everything—their money, their safety—to get to. When asked why he didn’t try to move somewhere closer to Turkey, Selim Gok, a 20-year-old student, responded matter-of-factly: “Because I speak English.”■
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Guests and attendeess mingle and walk through the atrium during the IMF/World Bank Group Spring Meetings at the IMF headquarters in Washington, DC, on April 24, 2025.
Jim Watson | Afp | Getty Images
After years dominated by the pandemic, supply chains, energy and inflation, there was a new topic topping the agenda at the World Bank and International Monetary Fund’s Spring Meetings this year: tariffs.
The IMF set the tone by kicking off the week with the release of its latest economic forecasts, which cut growth outlooks for the U.S., U.K. and many Asian countries. While economists, central bankers and politicians have been engaged in panels and behind-the-scenes talks, many are attempting to work out whether trade tensions between China and the U.S. are — or perhaps are not — cooling.
Policymakers from the European Central Bank that CNBC spoke to this week broadly stuck a dovish-leaning tone, indicating they saw interest rates continuing to fall and few upside risks to euro zone inflation. However, all stressed the current high levels of uncertainty, the need to keep monitoring data, and the high risks to the growth outlook — sentiments also echoed by Bank of England Governor Andrew Bailey in his interview with CNBC on Thursday.
These were some of the main messages from ECB members this week.
Christine Lagarde, European Central Bank president
On inflation and monetary policy:
“We’re heading towards our [inflation] target in the course of 2025, so that disinflationary process is so much on track that we are nearing completion. But we have the shocks, you know, and the shocks will be a dampen on GDP. It’s a negative shock to demand.”
“The net impact on inflation will depend on what countermeasures are eventually taken by Europe. Then we have to take into account the [German] fiscal push by the defense investments, by the infrastructure fund.”
“We have seen successive movements, you know, announcement [of U.S. tariffs], and then a pause, and then some exemptions. So we have to be very attentive… Either we cut, either we pause, but we will be data dependent to the extreme.”
On market moves:
“When we had done our projections, we anticipated that… the dollar would appreciate, the euro would depreciate. It’s not what we saw. And there have been some counter-intuitive movements in various categories.”
“The German market has obviously been shocked in a positive way by the program soon to be put in place by the German government, with a commitment to defense, with a commitment to a big fund for infrastructure development.”
Klaas Knot, The Netherlands Bank president
On tariff uncertainty:
“If I look back over the last 14 years, in the initial days of the pandemic I think that was comparable uncertainty to what we have now.”
“In the short run, it’s crystal clear that the uncertainty that is created by the unpredictability of the tariff actions by the U.S. government works as a strong negative factor for growth. Basically, uncertainty is like a tax without revenue.”
On the inflation impact:
“In the short run, we will have lower growth. We will probably also have lower inflation. As we also see, the euro is appreciating as energy prices have also come down. So together with the sort of negative factor uncertainty in the short run, it’s crystal clear that it will accelerate the disinflation.”
“But in the medium term, the inflation outlook is not all that clear. I think there are still these negative factors. But in the medium term, you might get retaliation. You might get the disruption of global value chains, which might also be inflationary in other parts of the world than the U.S. only. And then, of course, we have the fiscal policy coming in in Europe. So this is actually a time in which you need projections.”
On a June rate cut and market pricing for two more ECB rate cuts in 2025:
“I’m fully open minded. I think it’s way too early to already take a position on June, whether it would be another cut. It will fully depend on these projections.”
“I would need to see a more structured analysis of the impact on the inflation profile ahead of us, and only then can I say whether the market is pricing fair or whether I don’t.”
Robert Holzmann, Austrian National Bank governor
On the need to wait for more data and news on tariffs:
“We have not seen this uncertainty now for years… unless the uncertainty subsides, by the right decisions, we will have to hold back a number of our decisions, and hence, we don’t know yet in what direction monetary policy should be best moved.”
“Before looking at data in detail, the question is, what kind of political decisions will be taken? Is it that we will have some tariff increases? Is it that we will have strong tariff increases? Is it that we will have retribution by high counter tariffs?”
On the ECB’s April rate cut:
“I think there’s a broad consensus [on rates]. But of course, at the margin, people differ.”
“My assessment is that at this time, it wasn’t clear yet to what extent [tariff] countermeasures were being taken. Because with countermeasures in Europe, prices may have increased. Without countermeasures, quite likely the price pressure is downward. And for the time being, we don’t know yet the direction.”
On the direction of interest rates:
“I think if the recent noises about an arrangement [on trade] were to be true, in this case, quite likely it is more towards the downside than the upside with regard to prices. But this can be changed with different decisions and the result of which, we may even imagine in [the] other direction. For the time being, no, it will be down.”
“There may be further cuts this year, but the number is still outstanding.”
Mārtiņš Kazāks, Bank of Latvia governor
On opportunity from tariffs:
“With all this uncertainty and vulnerability, this is also the time of opportunities for Europe.”
“It’s a time for Europe to grasp all the aspects of being an economic superpower and becoming a really fully-fledged political and geopolitical superpower, and this requires doing all the decisions that in the past, were not carried out fully.”
“This requires political will, political guts to make those decisions, and to strengthen the European economy and assert its place in a global world.”
On market reaction to tariffs:
“So far it seems to be relatively orderly … but if one looks at the spillovers to Europe, the financial markets are working more or less fine, we haven’t seen spreads exploding or anything like that.”
“But in terms, however, of the macro scenarios, this uncertainty is extremely elevated in the sense that, given the possible outcomes, the multiple scenarios and their probabilities are very similar with the baseline [tariff] scenario.”
US President Donald Trump speaks during a bilateral meeting with Prime Minister of Norway Jonas Gahr Store in the Oval Office of the White House in Washington, DC, on April 24, 2025.
Saul Loeb | Afp | Getty Images
President Donald Trump denied that an aggressive bond market sell-off influenced his decision earlier this month to hold off on aggressive “reciprocal” tariffs against U.S. trading partners.
“I wasn’t worried,” Trump said in a Time magazine interview during which he was asked about financial market tumult after his April 2 “liberation day” announcement.
In the decree, Trump slapped 10% across-the-board duties against all U.S. imports and released list of tariffs against dozens of other nations. The extra levies were based on trade deficits the U.S. had against the respective countries and raised fears about inflation, a potential recession and disruption of long-held trade agreements.
Markets recoiled following the release. Treasury yields initially headed lower but quickly snapped higher. The 10-year yield rose half a percentage point in just a few days, one of its quickest moves ever, as investors also ditched stocks and the U.S. dollar.
Ultimately, Trump issued a 90-day stay on the reciprocal tariffs to allow time for negotiation. But he said it wasn’t because of the market tumult.
“No, it wasn’t for that reason,” Trump told Time in the interview from Tuesday that was published Friday. “I’m doing that until we come up with the numbers that I want to come up with. I’ve met with a lot of countries. I’ve talked on the telephone. I don’t even want them to come in.”
Yields have since moved lower, with the 10-year most recently around 4.28%, about a quarter percentage point higher than its recent low. Trump had said when he made the decision to hold off that the bond market had gotten the “yips.”
“The bond market was getting the yips, but I wasn’t. Because I know what we have,” he said. “I know what we have, but I also know we won’t have it for long if we allowed four more years of the gross incompetence. This thing was just running — it was running as a free spirit. This was — this was the most incompetent president in history.”
Though negotiations over tariffs are ongoing, Trump added that he would consider it a “total victory” even if the U.S. has levies as high as 50% still in place a year from now.
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The Bank of England is focused on the potential impact of U.S. tariffs on U.K. economic growth if there is a slowdown in global trade, the central bank’s governor Andrew Bailey said Thursday.
“We’re certainly quite focused on the growth shock,” Bailey told CNBC’s Sara Eisen in an interview at the IMF-World Bank Spring Meetings.
Going into its May 8 monetary policy meeting, the central bank will consider “arguments on both sides” around the impact of tariffs on growth and domestic supply constraints on inflation, Bailey said.
“There is clearly a growth issue we start with, with weak growth … but a big question mark is how much of that is caused by the weak demand, how much of it is caused by a weak supply side,” he continued.
“Because the weak supply side, of course, unfortunately, has the sort of the upside effect on inflation. So we’ve got to balance those two. But I think the trade issue is now the new part of that story.”
Inflation could be pulled in either direction by wider forces, with a redirection of trade exports into other markets being disinflationary, but a retaliation on U.S. tariffs by the U.K. government — which he stressed did not appear likely — pushing up inflation.
Bailey added that he did not see the U.K. as being close to a recession at present, but that it was clear economic uncertainty was weighing on business and consumer confidence.
IMF downgrade
The IMF earlier this week downgraded its 2025 growth forecast for the U.K. to 1.1% from 1.6%, citing the impact of U.S. President Donald Trump’s trade tariffs, higher borrowing costs and increased energy prices.
However, economic forecasting remains mired in uncertainty as countries engage in negotiations with U.S. officials over Trump’s swingeing universal tariff policy, currently on pause. The U.S. has imposed 25% tariffs on steel, aluminum and autos and a 10% levy on other British exports.
U.K. policymakers have expressed hopes of reaching a trade deal with the White House, with U.S. Vice President J. D. Vance saying there is a “good chance” of an agreement.
Bailey told CNBC on Thursday that he would be “very encouraged if the U.K. does make a deal,” but that its economy was very open and services-oriented, so it would still be impacted by a wider slowdown in growth or trade.
He also noted that inflation would increase from the current 2.6% in the coming readings due to effects from markets such as energy prices and water bills, but that the bump up would be “nothing like what we saw a few years ago.”
The Bank of England held interest rates at 4.5% at its March meeting, before Trump shocked the world with the scale of his tariff announcement.
Markets now see the BOE slashing rates to 4% by its August meeting.
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