Reduce reliance on US as tariffs, tensions rise – economists

Barbados must urgently reconsider its heavy dependence on traditional trade routes, economists have warned, as escalating tensions between the United States and China threaten to disrupt global supply chains and destabilise consumer demand.

Experts Dr Antonio Alleyne and Jeremy Stephen were interviewed by Barbados TODAY in response to a new round of US tariffs on Chinese goods announced by President Donald Trump, who has proposed increases of up to 50 per cent on a wide range of imports.

China has signalled it may retaliate, raising concerns of another prolonged trade war between the world’s two largest economies.

While the fallout may be unavoidable, the experts believe the crisis could force Barbados and the wider Caribbean into long-overdue trade diversification.

Dr Alleyne described the situation as a “forced benefit” that may help the region reduce its dependency on the US as its primary trade channel.

“This situation may push Barbados — and probably the rest of the region — away from the US and towards a more diversified approach,” he said.

“We still rely heavily on US ports, like Miami, but there are other markets out there that can help us strengthen or expand our supply chain options.”

Alleyne pointed to emerging opportunities such as Guyana’s expanding trade relationship with Brazil and the potential for new trans-regional hubs.

But he warned that if tensions drag on beyond six months, Barbados could begin to feel more serious effects.

“Barbados must be cautious. If this continues for four to six months or even a year, we’re definitely going to have problems,” he said, noting possible disruptions to import flows and price volatility.

The Barbados Chamber of Commerce and Industry has already warned that the latest US tariffs could drive up consumer costs and negatively impact tourism, both major drivers of the local economy.

Stephen agreed that the situation presents an opportunity for Barbados to reassess its trade strategy but cautioned that major structural and logistical barriers stand in the way of quick fixes.

“We are a price taker, not a price maker,” Stephen said.

“The idea of diversifying trade in the short run makes little sense when most of our imports, even those made in China, still pass through the United States.”

He noted that key exports such as rum and chemicals, which fall under the flat 10 per cent US tariff, limit Barbados’ already restricted export earnings.

He further warned that the global market’s negative reaction to the dispute may greatly impact tourism, stifling the positive outlook forecast by officials for this year.

“People are already seeing their wealth decline, and that impacts spending habits. While they may still travel, they won’t spend as much, and others might not travel at all,” he said.

But Stephen noted that there may be opportunities if the region moves to strengthen direct trade channels with non-US partners like China or Africa to bypass US tariffs.

He, however, noted that this would be long-term and capital-intensive.

“You’d have to repurpose shipping lanes and air traffic. That’s a two- to three-year plan at best, and we simply don’t have the systems or financing in place to do that now,” he said.

One realistic path forward could be regional collaboration on transshipment — ensuring goods enter the Caribbean without reaching US waters, he suggested.

“We may need to look again at our Common External Tariff policy and work with larger states directly for transshipment opportunities. If we can import goods through non-US routes — for example via Aruba, Bermuda, Colombia or even Guyana — it reduces exposure to tariffs triggered just by passing near the US coastline.”

He noted his belief that the tariff hikes may just be a negotiation tactic and may not hold, adding that President Trump’s unpredictability remains the biggest threat.

shannamoore@barbadostoday.bb