A new regional private sector study has found that Barbados and other Caribbean Community (CARICOM) member states could save approximately US$1.3 billion per year by diversifying their import sources away from the United States.
The CARICOM Private Sector Organization (CPSO) study suggested that engaging alternative import markets is crucial, particularly as escalating reciprocal US tariffs increase costs and expand the regional trade deficit.
The region currently serves as America’s third-largest import partner. Nearly 70 per cent of final imported goods—valued at US$7.7 billion—originate from the US.
These findings were presented during a recent hybrid forum in St Kitts and Nevis titled: Derisking CSME Imports: Examining the Scope for Goods Market Fulfillment from Non-Traditional Sources.
CPSO Chief Executive Officer and Technical Director Dr Patrick Antoine presented the findings from a comprehensive study revealing troubling trends in the region’s goods trade deficit with the United States.
The deficit increased by approximately US$200 million between 2022 and 2023, followed by an additional US$300 million increase from 2023 to 2024. Projections indicate a further US$500 million expansion between 2024 and 2025, even without considering the tariff impacts.
The new tariff regime, imposing 10 per cent to 15 per cent duties on previously duty-free goods, will drive costs upward by a significant degree.
The study projects that with the implementation by the US of 15 per cent reciprocal tariffs on Trinidad and Tobago and Guyana in July, the region’s forecasted export-revenue loss would increase to US$653.6 million.
“While trade openness supports economic activity and consumer welfare, overdependence on a single source of imports clearly does not benefit us,” Dr Antoine said.
CPSO Chairman Gervase Warner, in his remarks, also referred to the region’s substantial reliance on US imports, noting, “CARICOM consistently ranks third in terms of import share from the US, positioned closely behind Mexico and Canada.”
He pointed to specific examples, including the Bahamas, which sources over 60 per cent of its imports from the US, and St Kitts and Nevis, where 47 per cent to 51 per cent of import trade originates from the US.
The CPSO warned that US tariffs will likely trigger additional cascading effects through duties imposed on goods entering the US before transshipment to the Caribbean.
This secondary inflationary pressure, combined with rising domestic labour costs, threatens to increase living and business costs throughout the region while also posing threats to the competitiveness of Caribbean tourism offerings.
The Eastern Caribbean Currency Union (ECCU) faces particular vulnerability, with member states collectively sourcing just over 44 per cent of their imports from the US. Unlike some CARICOM States, which import raw materials for processing and re-export, ECCU Member States primarily import finished goods, offering limited opportunities for value-added production.
To enhance economic resilience, the CPSO recommends strategic import market diversification, which could deliver substantial cost savings, protect consumers from price volatility and improve competitiveness in key sectors including manufacturing and tourism.
The comprehensive analysis undertaken by the CPSO examined 1,251 product lines worth over US$9.1 billion, identifying significant opportunities to reduce US import dependence.
The study found that 32 per cent of non-fuel goods (including food products) and 23 per cent of mineral fuels could be sourced more cost-effectively from alternative markets. Remarkably, 94.7 per cent of non-fuel imports and 85.8 per cent of total imports (including fuel) could be competitively sourced from other suppliers.
It identified several alternative markets with substantial potential, including Malaysia, Brazil, the Netherlands, Spain, Turkey, South Africa, Estonia, Bulgaria, Portugal and Mexico. Notably, certain markets such as South Africa and Turkey offer large volumes of goods at approximately half the US price.
The analysis projects that the CARICOM Single Market and Economy (CSME) could realise annual savings of US$1.3 billion on US imports, representing 16.4 per cent of total import value.
The largest opportunities exist in the machinery and electrical equipment sectors, both critical to construction, foreign direct investment and broader economic development.
To capitalise on these opportunities, the study emphasised the need for improved trade facilitation and port logistics. An assessment of weekly liner connectivity from 17 potential supplier countries revealed that Jamaica’s Port Kingston maintains the highest regional connectivity, with Trinidad and Tobago’s Port of Spain ranking second.
However, many Organisations of Eastern Caribbean States (OECS) ports, including in St Kitts and Nevis, have limited or no direct liner connectivity, creating significant barriers to developing new trade relationships.
The CPSO stressed that Eastern Caribbean countries must also prioritise port infrastructure upgrades if they are to capture import diversification benefits.
ECCB Governor Timothy Antoine reinforced the urgency of movement toward these solutions. He challenged the region to leverage its strategic geographic position between the Americas, Africa and Europe to establish itself as a bidirectional trade logistics hub. This transformation could create a new growth engine alongside energy security initiatives and digital transformation efforts.
The CPSO said the results of the research can contribute to strategic responses by CARICOM, targeting the diversification of import and export markets, leveraging the locational advantages of CARICOM states, and introducing urgent policy changes to benefit from the shifts in regional and global supply chains.
The event was hosted by the CPSO in collaboration with the Eastern Caribbean Central Bank at the bank’s headquarters in St Kitts and Nevis. (EJ)
The post CARICOM could save US$1.3 billion by cutting US import dependence: Study appeared first on Barbados Today.
