The discussion on tariffs continued this month as the United States announced new tariffs and, in some instances, increased tariffs on some countries’ exports. It is acknowledged that a country has its right to impose levies on imports entering its jurisdiction, and in the absence of bilateral or other trade agreements, they are not obligated to treat any country favourably.
It therefore raises the question why the Caribbean Community (CARICOM) has not been more aggressive in considering a regional approach to tariff talks with the US and, more specifically, bolstering the Common External Tariff regime within CARICOM to strengthen the region’s single market. For small and medium enterprises that were hoping to benefit from a single market and economy through free movement of goods, capital and labour, the slow pace of the regional apparatus to give effect to this does not instil confidence. Following the last Heads of Government meeting in Jamaica, where only four member states were bold enough to agree to free movement of people by October this year, many are left to wonder, whither CARICOM?
President Donald Trump’s renewed ‘America First’ trade policy is the country’s right to self-determination. CARICOM should be incentivised to consider its industrial policy that can provide the equitable development of markets according to each member state’s comparative advantage.
In 2023, CARICOM countries had a significant trade deficit with the US, importing nearly twice as much as they exported—US$9.76 billion in exports and US$18.9 billion in imports. Since the 1980s, the Caribbean has benefited from US preferential trade programmes like the Caribbean Basin Initiative and others, which are non-reciprocal. Notably, Guyana and Trinidad and Tobago, CARICOM’s main oil and gas exporters, maintain trade surpluses with the US. Their energy exports are more than commercial transactions; they are essential to US energy security, offering reliable, nearby sources of oil and gas in an increasingly unstable global environment.
A recent article in the Jamaica Gleaner posited that the CARICOM member states have played a consistent role in contributing to US economic strength by importing more goods from the US than they export, resulting in a long-standing trade surplus in favour of the US. Despite this relationship, 13 of the 14 CARICOM countries are facing a ten per cent tariff on their exports to the US, with Guyana, a significant oil exporter, facing a much steeper 38 per cent tariff.
Regardless of the potential harm from these tariffs, CARICOM nations are unlikely to respond with retaliatory tariffs. The reason is that between 60 per cent and 70 per cent of the region’s consumer goods come from the United States. Imposing duties on US imports would only raise the cost of living for Caribbean populations and risk a broader trade confrontation the region cannot afford.
The clarion call for the region is to prepare and adopt a regional strategy, more so than a country approach. Caribbean exporters will need to adapt their strategies, diversifying markets or investing in non-traditional entry routes to the US. For importers relying on US goods, alternative sourcing may become necessary to manage costs.
The region’s private sector is not advocating retaliation by CARICOM given the region’s high dependence on US imports and limited fiscal space. Instead, the private sector needs a regional industrial policy.
According to Leo Preville, director of the CARICOM Single Market Unit, there needs to be more favourable trade between countries like Trinidad and Tobago and Barbados. He highlighted that Trinidad’s imports from Barbados declined from US$30.4 million in 2018 to US$24.7 million in 2022, despite the potential for higher figures. Additionally, Barbadian Minister Sandra Husbands also urged the region to address the $3.3 billion in imports from outside the Caribbean, despite having the capacity to produce similar goods regionally. Minister Husbands, while speaking during a regional trade mission, stressed the need for collaboration, removing barriers, improving logistics, and investing jointly to lower unit costs. She emphasised that Caribbean nations must focus on regional self-sufficiency to remain competitive.
One regional diplomat opined that in a time of global instability, shrinking access to finance and the escalating effects of climate change, CARICOM should be stronger, and more robust. However, the deep-rooted trade disadvantages of smaller states have undermined regional solidarity. Despite efforts to build a true CSME, the necessary legal, structural, and compensatory mechanisms remain underdeveloped or unimplemented. Trinidad and Tobago has been the primary beneficiary of the CSME, while smaller states, particularly the Organisation of Eastern Caribbean States, have been most affected.
The 1992 West Indian Commission’s Time for Action report, which highlighted the trade disadvantages faced by smaller economies and called for stronger mechanisms to ensure balanced regional integration, still appears relevant today. The CSME was intended to foster balanced economic integration, but the compensatory mechanisms, like the CARICOM Development Fund (CDF), have failed due to inconsistent contributions from larger states. It would appear that with the geopolitical tensions that abound, CARICOM has to address issues internal to the integration project and position itself to represent the interest of the region’s private sector on the global stage. CARICOM after 50 years must move from ideation to implementation.
During her recent chairmanship of CARICOM, Barbados Prime Minister Mia Mottley urged citizens, businesses, and regional leaders to brace for growing global uncertainty by strengthening financial preparedness, resource planning, and international partnerships.
She called for increased investment in Caribbean agriculture and light manufacturing, asserting that the current 25 by 2025 initiative led by Guyana’s President Ali is no longer ambitious enough given the region’s circumstances. Encouraging a shift in consumption habits, she urged citizens to buy healthy, locally produced foods instead of imported processed alternatives. Mottley also highlighted the importance of strengthening ties with Africa, Latin America, Central America, and long-standing partners like the UK, Europe, and Canada, cautioning against over-reliance on any single market.
The Barbadian leader urged Caribbean citizens to support local and regional businesses, underscoring that unity would enhance the region’s resilience.
The Small Business Association of Barbados (www.sba.bb) is the non-profit representative body for micro, small and medium enterprises (MSMEs).
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