Playing draughts in a global chess game

These are challenging times for the leaders of small island developing states like Barbados as the global unravelling at the political, economic and social levels appears to be intensifying at a staggering pace.

The frustrating thing about the current circumstances is the level of uncertainty that has been created. People are unable to plan if they have no idea of what is likely to occur tomorrow. If there is one thing that is counterproductive and problematic for businesses and economies, it is uncertainty.

Crashing stock markets in the United States of America (USA) are emblematic of the reactions to uncertainty in the world’s largest and most influential economy.

The trade policy of the USA is at the centre of global doubt. There is no predicting what action or executive order the president is likely to declare, or late-night social media posts that will result in a mad scramble by his targets to respond.

Experts from around the world are trying desperately to understand what the end game of the American leader is, and if there is a method to the madness.

One such person is Luis Castillo, a fixed income strategist with RBC Dominion Securities in Canada, who was in Barbados recently for the Barbados Risk and Insurance Management (BRIM) conference staged by the Barbados International Business Association (BIBA).

The conference delegates, eager to find the answer to the highly disruptive trade policies of the US administration, absorbed every word from Castillo.

In a most interesting analysis Castillo surmised that the Americans may be deliberately seeking to devalue the US dollar in an effort to make American-made products more competitive in export markets.

The brutal tariff war that has resulted in million-dollar fines on ships that were manufactured in China, and 104 per cent tariff on Chinese products will make life difficult.

Castillo also targeted the staggeringly high United States federal debt, which stands at 120 per cent of GDP or about US$35 trillion and the controversial Mar-a-Lago Accord, a hypothetical blueprint crafted by Stephen Mirren, the president’s candidate to lead the US Economic Council.

“What role do tariffs play in all of this? Well, tariffs are used again as leverage in negotiations. . . . So perhaps tariffs are not the end goal; they’re just a pawn in a broader chess game,” he contended.

But while political leaders in industrialised nations play their “chess games”, small countries like Barbados are left to grapple with the effects. Prices are expected to rise significantly, supply chains are likely to be disrupted as manufacturers, businesses, political leaders and academics scramble to course-correct.

An even more dangerous development for Barbados is the impact of all this uncertainty on our vital tourism sector. So much is riding on the success of the sector, it again exposes the deep vulnerabilities of our economy that leans so heavily on one industry

Having made the United States a deeply unattractive place to visit due to the hostility at airports and other places of entry, the American leadership apparently failed to appreciate that it too has a thriving tourism sector that relies on the spending of visitors.

According to the US Travel Association, Canada is the top source of international visitors to the United States, with 20.4 million visits in 2024, generating US$20.5 billion in spending and supporting 140 000 American jobs.

It has been reported that visitor arrivals from several European countries and Canada to the US are down dramatically.

While we take no pleasure in the harm that is being caused to ordinary Americans working on service jobs, the current state of affairs is another reminder that we may not have learned our lesson from the COVID-19 pandemic.

What are those lessons? That when crises occur, the big, industrialised countries will begin to look inward and therefore, may not be the dependable partners they were when times were good.

On the list of lessons not learned is the need for food security. As the 2020 and 2021 period demonstrated, when the ships stop arriving, Barbadians need to be in a position to eat what they grow.

There was a Caribbean Community plan to reduce food imports from outside the region by 25 per cent by 2025 through increased production in the Caribbean. Someone needs to tell Barbadians how close to that goal we have attained.

One could argue that the greatest lesson of the pandemic period was the requirement to diversify the economy. All the statistics and plans point in the opposite direction – an economy that is even more dependent on tourism than ever before.