Minister of Trade: US tariffs ‘a blessing’

Newsday reporter Ryan Hamilton-Davis, left, interviews Minister of trade Satyakama Maharaj at the Lidj Yasu Omowale Emancipation Village, Queen's Park Savannah, Port of Spain, on August 1. - Photo by Jeff K. Mayers

Taking a line from Ultimate Soca Champion Blacka Dan, Minister of Trade Satyakama Maharaj called the adjusted US tariffs on imported goods from all countries in the world including TT a “blessing.”

He said the tariffs imposed on TT goods going to the US would only spur TT businesses to seek other markets such as India and Africa.

“What people see as obstacles we see as stepping stones. This is the best thing to happen. It is long overdue,” he said.

Maharaj was responding to questions from reporters while at the Emancipation Day celebrations at Emancipation Village in the Queen’s Park Savannah on August 1. Minutes earlier, incoming president of the African Import Export Bank (Afroeximbank) Dr George Elombi pledged to double Afroreximbank’s allocation to the Caribbean, from US$1.5 billion to US$3 billion. He told reporters that as soon as TT signed on with the bank it would have access to the funding for several projects.

“We will have instant financing for a lot of major projects,” he said “From people that look like us, think like us and feel like us.”

“One of the projects could include the re-opening of the steel mill. They are bankers. We present them with the projects and they are going to work with us as favourably as possible.”

What are tariffs and why is the US imposing them?

Tariffs are essentially a tax charged on goods imported from other countries.

For example, if TT had a 20 per cent tariff on a particular US-made item costing US$10, when it is imported, it will have an additional US$2 dollar charge.

In this case, items going from TT to the US will face a tariff. This means, importers will have to pay a higher price for TT goods, which they can either decide to absorb as an added cost of doing business or pass on to customers.

On January 20, hours after he was sworn in as the President of the US Donald Trump announced he would impose a 25 per cent tariff on imports from Canada and Mexico, starting February 1. This, however, was put off several times after calls and negotiations were held between the three country’s leaders.

That was until April 2 when Trump announced tariffs on imports coming from all countries in the world on a day he called “Liberation Day.”

At that time, TT was stuck with what was then the US's baseline global tariff of ten per cent on all imported products.

But on July 31 the White House announced “further modifications” to the tariff regime on goods entered for consumption or withdrawn from a warehouse for consumption, on or after 12.01 am eastern time, seven days after the order.

TT was then listed as being subject to a 15 per cent tariff.

One exception to the tariffs related to “goods for consumption that were loaded onto a vessel at the port and in transit on its final mode of transit before 12.01 am eastern daylight time seven days after (the) order.”

Trump has given many reasons for imposing tariffs.

A BBC report says Trump believes the tariffs will encourage US consumers to buy more American-made products which will lessen the trade deficit between the US and other countries which has been recorded in the tens of billions.

The US president has also used the tariffs as a bargaining tool for many countries. For example, the initial tariff imposed on China, Canada and Mexico were on the grounds that they were not doing enough in border control and with regard to stopping the flow of fentanyl into the US through their borders.

In July, Trump threatened to introduce tariffs against companies trading with Russia unless a deal to end the war in Ukraine was not reached within 50 days.

The White House communique said something similar:

“I have received additional information and recommendations from various senior officials on, among other things, the continued lack of reciprocity in our bilateral trade relationships and the impact of foreign trading partners disparate tariff rates and non-tariff barrier on US exports, the domestic manufacturing base, critical supply chains and the defense industrial base.

“I have also received additional information and recommendations on foreign relations, economic, and national security matters, including the status of trade negotiations, efforts to retaliate against the US for its actions to address the emergency declared in Executive Order 14257, and efforts to align with the United States on economic and national security matters,” the White House communique said.

It added that some countries were in the middle of negotiations with the US on the matter of tariffs and as such, the tariffs would remain in effect until a proper agreement was met.

Rhea Commissiong of OBJC Genuine Leather Sandals and Earrings shows Minister of Trade, Investment and Tourism Satyakama Maharaj her leather sandals during the TIC Trinidad and Tobago Manufacturers Association Trade and Investment Convention (TIC) at the Torenia Hall, Centre of Excellence, Macoya, on July 18. - Photo by Ayanna Kinsale

Expert: US not the only market in the world

Confederation of Regional Business Chambers president Vivek Charran and Dr Indira Rampersad, head of the UWI Department of Political Science said there was a lot to consider when looking at the effect of the tariffs on TT business.

But Rampersad, in a similar tone to the Minister of Trade, took note that despite TT’s close ties with the US, it is not the only market in the world.

“What it would really do is make our goods more expensive. If it is imposed, 15 per cent is imposed on our goods, which is five per cent more than what was previously proposed.

“He's doing this globally. In some countries, it's 25 per cent (and higher.) So it would make our goods more expensive in the US market.”

"The US is not the entire world. The world is a big place and while the Caribbean is a small part and TT smaller still, we have a population of almost 1.4 million people who have to survive and we have to survive sustainably.”

On the other hand, she noted that other markets such as India and countries in Africa have been opening their doors for trade.

“The diaspora is important to them, both Africa and India in particular and they have huge diasporas and the Caribbean. So it's not only cultural ties, but they're also open for economic ties, diplomatic ties as well.”

She highlighted visits from delegations from African countries such as the Asantehene Otumfuo Nana Osei Tutu II, the President of Ghana and Indian Prime Minister Narendra Modi to TT.

“I think we need to continue to forge ties. These are big countries. Africa is fast developing. India is galloping ahead, especially in ICT and lots of other areas. India has 1.4 billion. India is the second largest, most populated country in the world. China is the most populated. And if we can get with them for trade relationships they can become a market for some of our products as well.” she said. “The time will come when we will no longer be so dependent on the US.”

Charran said TT had to look at the tariffs in light of global trade where tariffs on imports have been imposed on all countries, with TT bearing among the lowest.

“There are countries who face as much as 50 per cent like Brazil or China and Canada and Switzerland who face 35 per cent and above.”

Both said that while the tariffs might increase prices of some items, some of TT's non-energy products might either not be included in the list of products earmarked for tariffs.

Charran said, “TT, other than chocolate, doesn’t export many high-valued or high-priced items. The largest sector of exports is food and beverages. Within that sector, Angstura rums exported could face a price increase that may be more significant, but then many other countries that export alcohol have a similar if not higher tariff which negates the effect.”