BCCI cautions US tariffs could hurt consumers and tourism

The Barbados Chamber of Commerce and Industry (BCCI) has warned that sweeping tariffs imposed by US President Donald Trump could lead to higher consumer prices here, disrupt regional shipping, and harm the Caribbean’s economic stability, particularly its vital tourism industry.

In a move that sent global stock market values plummeting, the new tariffs — imposed as part of what Trump described as the biggest reorganisation of the global economy since the Second World War — were aimed at reviving American manufacturing and rebalancing trade relations with a wide range of countries.

For most countries in the Caribbean Community (CARICOM), the tariff rate for exports hovered around 10 per cent, but Guyana, which exports crude oil, rum, gold, timber, fish, shrimp, and farm products to the US, was hit with a 38 per cent rate that triggered an immediate reaction from a baffled Irfaan Ali administration.

It is the 10 per cent tariff that BCCI president James Clarke believes will have a knock-on effect on the cost of imported items from the US in particular.

“The biggest worry is we buy so much stuff from the United States — that is, Barbados and the whole Caribbean — and any increases in their costs . . . to the extent that even if it’s manufactured in the US; but the world is global, right? Many things are made of multiple components from all over the world. So, if they all attract tariffs and the cost of things starts to go up, and they are things that we in the Caribbean use, we can expect those prices to go up too,” Clarke told Barbados TODAY.

“To what extent, we are not sure because this is a lot more nuanced than that. But from everything that we can gather, we would expect to see some price increases, which is very unfortunate.”

Also at issue is a proposed charge of up to $3 million for Chinese-built or Chinese-flagged vessels docking at US ports. The Trump administration claims this measure and other contemplated fees would curb China’s growing commercial and military dominance on the high seas while promoting domestically built vessels.

Clarke flagged this measure as a “massive issue” for container shipping into Barbados and other territories in the region.

He said: “The Caribbean Private Sector Organisation (CPSO) has made their statements to the US trade representatives on that matter. But basically, in a nutshell, it could just decimate shipping in the Caribbean . . . because many of the vessels here are very small compared to others. If you spread a million dollars over a vessel that has 8 000 40-foot containers on it versus one that has 500 containers, you can understand what will happen with freight rates.

“So this is a massive concern for us here. But anyway, submissions were sent in last week. So we are basically waiting now to find out what considerations that US trade representative has made; what their feedback to the Caribbean is going to be. That’s information we are waiting on.”

But a former minister for industry, international business, commerce and small business development in the Freundel Stuart government suggested that the 10 per cent tariff imposed on Barbados’ exports to the United States was not overly significant.

Donville Inniss told Barbados TODAY: “With respect specifically to the 10 per cent tariff imposed on Barbados — to my mind — that does not raise eyebrows too much because our exports to the US amount to about $145 million. All things being equal, that would probably mean an additional $15 million in costs when goods land in the USA. And we export primarily rum, condiments and such like; specialty items that usually can command a premium price in the export market, especially among the diaspora.

“To suggest that manufacturers who export to the US should do more to reduce their production costs . . . help to reduce their export costs — I don’t think that is going to fly because the truth of the matter is that Barbados is indeed a pretty pricey place to produce; productivity is not at its highest at all; and I really don’t see much wriggle room for manufacturers to reduce their costs.”

He also argued against suggestions that Barbadian entrepreneurs should establish production facilities in the US as an alternative solution, as Trump has demanded.

The former minister explained there are significant time constraints involved in setting up such operations and noted that producing goods in America remains expensive — particularly when raw materials must be imported from countries such as Barbados.

Inniss expressed greater concern about the potential fallout for tourism due to rising prices affecting American consumers’ disposable income.

“The bigger issue for me is the impact this will have on our main source market for tourism,” he said. “The combination of tariffs imposed on various countries exporting to America means US consumers will almost immediately face a higher cost of living if inflation rises overnight.”

Inniss suggested this could lead Americans to have less money available for discretionary spending such as vacations abroad — an outcome he described as “an almost immediate negative impact” for Caribbean islands like Barbados.

He also voiced concerns about proposed fines or fees targeting Chinese-constructed shipping vessels entering regional markets: “The threat . . . is another serious issue; I really must give full support to Prime Minister Mia Mottley for writing directly about this matter.”

emmanueljoseph@barbadostoday.bb