Businesses wait for US tariff, shipping cost hike

Exporters and consumers are set to face rising costs and trade disruptions as the United States imposes steep tariffs this month—10 per cent on Barbadian goods and a staggering 54 per cent on Chinese-built ships.

Business executives interviewed by Barbados TODAY warned of significant price hikes and supply chain challenges, with ripple effects expected across the region.

Andy Armstrong, managing director of Armstrong Agencies Ltd, said on Friday that the 10 per cent tariff is already causing concern for exporters who rely on US markets.

“It’ll obviously have a negative impact on our exports to the USA,” Armstrong said. “Either we will have to cut the price we sell to them at, or the price on the shelf in the USA will go up by about 10 per cent.”

He made clear that cutting prices was not a viable option for most local exporters.

“We’re not particularly in a position to cut prices. So right now we’re talking to the importer just to see if the market can handle a 10 per cent increase or not. It’s definitely going to have a negative impact one way or another.”

Armstrong also flagged deeper concerns related to global supply chains. Products manufactured in China but sold through US wholesalers could see significant price escalations, even for small orders reaching Barbados, he explained.

“You hit China with up to 54 per cent [in tariffs],” he said. “A lot of stuff is made in China, shipped to the USA in containers, and then smaller places like Barbados, we might buy one or two pallets of that product. But ultimately, it’s being shipped from America, even though it was made in China.”

He further explained that some US suppliers lack bonded facilities, which means they are now paying duties upfront on Chinese goods before re-exporting them to the Caribbean. That cost, Armstrong said, will trickle down to Barbadian consumers, particularly on health and beauty products, which are heavily sourced from China.

Even sourcing directly from China, he cautioned, may not spare Barbados from cost increases if US port fees on ships of Chinese origin go into effect.

“Even if we get a container directly from China, but that shipping line happens to also stop in America, they may charge that ship US$1 million, and they may have to pass some of that on to us as well,” Armstrong said. “That would be the bigger issue if that happened.”

He noted that regional shipping lines such as Tropical Shipping and various associations—including the Barbados Chamber of Commerce and the Barbados Manufacturers’ Association—have already lodged objections with US authorities.

“There’s a whole slew of associations all across America who are objecting to the tax on the ships,” Armstrong said, expressing cautious optimism that the measure would be amended.

“You would hope that if America decides to maintain this fee on the ships, at least it would be based on the size of the ship and not just a flat fee… that would make [more] sense.”

The concern, he said, is that the proposed fee—a flat million-dollar charge per vessel—could disproportionately impact smaller regional vessels serving the Caribbean, which typically carry only 500 to 1 000 containers compared to the 12 000-container mega ships that serve large global routes.

Immediate past president of the Barbados Chamber of Commerce and Industry Anthony Branker echoed Armstrong’s concerns, particularly on the tax targeting Chinese-made ships, calling it “perhaps the most onerous” measure on the table.

“Even though some of the US shipping lines are trying their best to have it waived or create an exemption zone, we still have to do what we can as a government and as a people to buffer the most vulnerable in our society,” Branker said.

He urged the government to consider temporary relief measures, such as revising how duties are calculated or adjusting the VAT rate. “If that tax goes into place on those Chinese-built ships, the government has to urgently look at reducing the effect on the average consumer,” he stressed.

Branker also warned that importers may begin to shift sourcing strategies, possibly moving away from branded products traditionally imported via the US market.

“Consumers may have to make a shift in terms of their preference because some of the branded products that we may be accustomed to—we may not be able to access them at the same pricing,” he explained.

Branker also noted that prices of finished goods exported from the US to Barbados could rise depending on how much raw material is imported into the US and impacted by the new tariffs.

“We export rum and beverages and so forth into the US, so that will also have an impact on the price to the consumer in the US,” he said. “But if there’s a demand, people will still buy it.”

Still, Branker believes the shipping tax on Chinese-built vessels poses the most immediate threat. “That is going to be most immediate for us—the tax on the Chinese ships per call,” he said.

Despite looming threats, Armstrong remains hopeful that lobbying efforts by regional and international shipping associations will result in a revised framework.

“I’m optimistic because it really doesn’t make sense how it was initially put forward,” he said. “Let’s hope common sense prevails.”

sheriabrathwaite@barbadostoday.bb