Elizabeth Morgan | Confronting Trump’s tariffs

AS ADVISED last week, under the 1977 US International Emergency Economic Powers Act, the US tariffs, compliments of the Donald Trump administration, are here, and they have rocked the world, being more bizarre than could be envisioned. Donald Trump on Wednesday, April 2, imposed a baseline tariff of 10 per cent on all countries, and reciprocal tariffs on a list of countries ranging from 10-50 per cent. This list is still not clear, as it is supposed to be a list of countries which have trade surpluses with the USA. This list, however, includes countries which have trade deficits with the USA and which conduct minimal to no trade with the country.

Trump says that the USA, which is the world’s richest country for years and the only G7 country to record favourable growth at the beginning of 2025, has been taken advantage of through the years by all its trading partners. Those who have covered trade and economic issues over the decades know who the advantage-taker really is, especially in dealings with developing countries. In the Caribbean region, development historians can speak to challenges which the USA has posed in this region and hemisphere.

It should also be said that Trump has failed to mention the US’s dominance in trade in services. The US, in 2023, exported over US$1 trillion in services and, in 2024, its surplus in services trade continued to grow. The US is primarily a services economy and, through its services, globally exerts its strong cultural influence, especially now via the Internet and cable television.

EASE OF TRADING WITH THE USA

Do not believe that it is easy to trade with the USA. US tariffs, as given in its WTO schedule, are low by its choice for over 80 years, as stated in previous articles. The USA, however, has protected its market and producers by using non-tariff measures, such as quotas, subsidies, technical barriers, and sanitary and phytosanitary (health) measures. The US also seeks to apply internationally punitive measures in Section 301 of its domestic 1974 Trade Act to address unfair trade practices. Be assured that Jamaica cannot export beef patties or poultry to the USA. Believe that quotas can disappear or be drastically reduced overnight.

NON-RECIPROCAL DEVELOPMENT TRADE SCHEMES

From the 1980s, Republican President Ronald Reagan, following the Grenada situation, sought to give some development aid to the Caribbean Basin countries and introduced the Caribbean Basin Initiative (CBI), which includes two pieces of legislation adopted by the US Congress. These were the Caribbean Basin Economic Recovery Act (CBERA) and the Caribbean Basin Trade Partnership Act (CBPTA). CBERA and CBPTA are unilateral, non-reciprocal trading arrangements allowing countries in the Caribbean Basin to export goods duty-free (without tariffs) into the USA, with some exceptions. These countries are allowed to have tariffs on US imports. At the request of successive US administrations, CBERA and CBPTA were given periodic waivers from the most favoured nation (MFN) principle in both the General Agreement on Tariffs and Trade and the World Trade Organization (WTO). In the WTO, CBERA would be up for MFN renewal this September.

CBI, along with the UN Generalized System of Preferences and the African Growth and Opportunity Act, recognised the development imbalances in the world between the developed and developing countries, and provided trade preferences to eligible developing countries. The USA determined eligibility. These measures have been useful tools in soft diplomacy, along with other development aid programmes.

With the Trump tariffs, these pieces of legislation have been nullified, although they can only be revoked by the US Congress.

TARIFFS APPLIED TO CARICOM COUNTRIES

CARICOM countries, with the exception of Suriname, exported goods to the USA duty-free under CBERA/CBPTA. CARICOM countries collectively have consistently had a trade deficit with the USA, their principal trade partner. The US continued to have a trade surplus in 2024.

Only two CARICOM countries have a trade surplus with the USA, Trinidad and Tobago and, more recently, Guyana, due to oil exports.

Jamaica’s imports from the USA in 2024 were US$2.6 billion, and its exports valued US$376.34 million. The trade deficit with the USA was US$2.27 billion. As of Saturday, April 4, Jamaica and other CARICOM countries, except Trinidad and Tobago and Guyana, are facing a tariff of 10 per cent on their goods export to the USA. Trinidad and Tobago is facing a tariff of 12 per cent and Guyana a tariff of 38 per cent on non-oil products (alumina, gold, rice?) apparently as reciprocal tariffs. Why?

Believe it or not, Haiti, the only least developed country (LDC) in this hemisphere, now in political and economic turmoil, has also received a tariff of 10 per cent. Why?

Belize, Haiti, Jamaica, and Suriname appeared on the reciprocal tariffs list. Why?

FREE TRADE AGREEMENTS

The USA negotiated reciprocal free-trade agreements (FTAs) with 20 countries. Reciprocal in a free-trade agreement means that the majority of trade in goods is duty-free for all parties. The 20 countries are Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Jordan, Mexico, Morocco, Nicaragua, Oman, Panama, Peru, Singapore, and South Korea. Interestingly, all these countries, which include parties to the Central America-DR FTA, have had reciprocal tariffs of 10-50 per cent imposed, and most have a trade deficit with the USA. This indicates that the USA is the main beneficiary of most of these FTAs, which it negotiated. These FTAs are treaties approved by the US Congress, and should be notified to the WTO.

WHAT DOES CARICOM DO?

The countries of the CARICOM region are facing a situation that is actually without logic and threatens the multilateral rules-based trading system. It is actually promoting rule by the most powerful and influential, and this would be a situation CARICOM countries would not be able to navigate effectively. There is no point in CARICOM countries attempting to retaliate against the Trump tariffs.

In a rules-based system, trade problems should actually be resolved in the dispute-settlement mechanisms (DSMs) established in the WTO, at the regional levels, and under FTAs. The USA has been instrumental in crippling the DSM in WTO and has ignored the mechanisms under FTAs. In multilateral trade negotiations, it has to be give and take; everybody cannot make demands without conceding anything. The WTO, however, still has a deliberative role, if not for the USA, then for the other 165 members, including those from the CARICOM region. One from 166 should not leave zero.

DIRECTION TO TAKE

It was encouraging at the Jamaica Manufacturers and Exporters Association Expo to talk to some exhibitors who were considering competitive advantage, examining alternatives, and looking for opportunities within CARICOM and with other trade partners. This is the direction to take.

CARICOM countries and stakeholders should also be seeking clarification from the US authorities on whether these “emergency” tariffs are temporary or permanent, and on the current and future trading relations with developing countries, particularly small island developing states and LDCs.

It is understood that CARICOM member states will be having regional consultations this week.

Elizabeth Morgan is a specialist in international trade policy and international politics. Send feedback to columns@gleanerjm.com.