Authorities and major businesses are drawing up emergency measures to protect citizens from surging prices, after new US tariffs came into effect last week and sparked warnings of further cost-of-living increases, Barbados TODAY can reveal.
Triggered by a new 10 per cent duty on Barbadian goods entering the US, which came into force on Thursday as part of President Donald Trump’s sweeping new taxes on imports from more than 90 countries—in his bid to promote domestic manufacturing, protect national security, and substitute for income taxes—the Barbadian business community has also started talks on a parallel plan to shift trading away from the US.
The plan also includes shifting food imports from the United States, Barbados’ main supplier for decades, to Latin America.
Describing Barbados as a price-taker due to its high level of imports, President of the Barbados Chamber of Commerce and Industry (BCCI) Paul Inniss said that in many cases, prices from the US “will inevitably be passed on to the consumer”.
As a consequence, he disclosed that the BCCI and the government are collaborating on a strategic plan to try to ensure prices do not spiral, particularly as they impact consumers.
He told Barbados TODAY: “We are currently in discussion with the Ministry of Energy and Business to figure out how we can manage a stabilised cost of goods to our consumers in Barbados. There is some glimmer of hope there, in terms of some things that can be done. So, we are working through those elements. I can’t disclose them at this point.
“But the idea is we can expect, in the near term, as our current stock is consumed, that you can possibly see an increase in the price of goods in Barbados, specifically as they come from the US.”
Inniss pointed out that not all businesses will be affected equally, as some do not rely mainly on the US as their source market.
But the bulk of the country’s food is bought from the US, he explained, so those retailers and distributors who source such goods from there will be directly affected.
“We can expect a knock-on effect there from those members who import a lot of their goods from the US market. From an exporter perspective, it creates a hurdle. As you would appreciate, a tariff is a tax. If you had a hurdle before, it presents another hurdle for our exporters to the US market in terms of making our products more expensive on the domestic US market,” Inniss said, adding that consideration must also be given to how Barbados can work through and retain its market segments and its raw materials inputs.
He also noted that Barbados buys a lot of materials from the US, in addition to goods channelled through American ports from elsewhere.
“There may be implications for some of us who manufacture, assemble and do stuff locally [regarding] how the tariffs will actually impact those things that we purchase elsewhere, that may come through the US,” Inniss argued.
The chamber president indicated a plan to diversify supply by shifting to other sources, such as Latin America, in phases.
Inniss said: “There are always two sides to this challenge; and from our perspective, it gives us the opportunity to reconsider our source market strategy, and this is from a membership perspective, and also our supply chain strategy as well.
“Many of the chamber members have started working on exploring other options. You would appreciate that a lot of the contractual arrangements that our members would have with suppliers in the US market, are long-term, in many respects, or medium- to long-term, and they would need to renegotiate, if possible, or navigate those arrangements they currently have in place.
“We need to review and reconsider our supply chain strategy so that we can be resilient, and I would also say flexible. For example, we are currently doing some really good work with the Ministry of Energy and Business and the Ministry of Foreign Affairs and Foreign Trade to find solutions…there are solutions to some of our supply chain and source market challenges, which is something that we are learning.”
The business community spokesman revealed that they are now finding out that Barbados can source about 40 per cent of its produce from Latin America, which includes major economies such as Brazil, Chile and Mexico.
“That actually presents us with an opportunity that we should not allow to pass by, and figure out how we can diversify our reliance on one particular source, and maybe expand our network of supply and source from other markets, to help manage any uncertainties that may arise from time to time” said Inniss. “That is something we are currently working through, and working with the ministries to manage the fallout and impact.”
He stressed that this new strategy is being approached as a whole-of-country challenge, not just by the Chamber of Commerce.
He said: “Our members do the bulk of retail and distribution, and therefore, we have a critical part to play in terms of finding alternate solutions to the challenge that we are now faced with. But the reality is, it will impact us, even from the perspective that, even if you are not directly involved in trade distribution, the cost of goods, and I would also say some services, will probably increase. So, there will be some element of inflation over time; and we will just wait and see how it unfolds as it relates to the alternate sources of goods and inputs and raw materials.”
emmanueljoseph@barbadostoday.bb
US remains Barbados’ top trade partner
The latest trade figures underline Barbados’ heavy reliance on the United States for both its imports and exports. Nearly half of all food imports and more than a third of total merchandise imports are sourced from the US, while American markets remain a leading destination for Barbadian exports.
2024 at a glance:
– 45.5% of Barbados’ food imports came from the US
– 42.9% of food and beverages imports came from the US
– 37.8% of all merchandise imports came from the US
– 17.6% of all general merchandise exports went to the US
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