Alicia Nichols
On April 2, 2025, US President Donald J. Trump announced an additional 10% AD Valorem tariff on goods imports from all countries, including the Caribbean Community (CARICOM) countries, under his new “mutual tariff policy.” Furthermore, some countries like Guyana have a surplus in commodity trade with the US, but will face even more sudden tariffs. This article explains the development of these “days of Liberation” and what they mean for the CARICOM countries.
Mutual customs policy
Earlier this year, on January 20, 2025, President Trump Presidential Memorandum He outlines the broad outline of his American First Trade Policy 2.0 and begins an investigation into the root cause of the country’s “big and sustained” commodity trade deficit. This was followed by a second executive order. President’s Memorandum on Mutual Trade and Tariffs It was published on February 13, 2025 and ordered a review of its contributions to the imbalance between incompatible trade practices and US trade. On April 1, 2025, the President received the results of these investigations.
The April 2, 2025 executive order is entitled “Regulating imports with mutual tariffs to correct trade practices that contribute to large and sustainable annual US goods trade obstacles.”
Using presidential authorities in accordance with the International Emergency Economic Force Act of 1977 (IEPA), this policy applies an additional advertising obligation from 10% on imports from all US trading partners at 12am EDT on April 5, 2025. For countries in Appendix I, these tariffs will increase to country-specific fees outlined on April 9, 2025 (EDT). For Guyana, the only country in Appendix I of the Caribbean Community (CARICOM), exports of goods to the US will be hit by an additional 38% advertising valorem tariff.
These tariffs remain indefinitely until the President determines that the terms that guarantee them have been “satisfied, resolved or relaxed.” Additionally, the president has the power to increase tariffs if the country retaliates. The narrow range of products listed in Appendix II of the Memorandum are exempt from advertising valorem customs duties.
These new “mutual” tariffs aim to address what the Trump administration perceives as chronic non-recurrent US tariffs. However, the methodology used to determine these tariffs faces criticism. When it comes to so-called “mutual” tariffs, the first idea by many of us in the trade policy community was that the United States coincided with the tariffs accused by these countries on US imports. Rather, according to financial journalist James Slowiecky. x’s post And the formula for calculating additional tariffs later confirmed by economists and the administration appears to involve simply multiplying the country’s trade balance by the value of exports to the US by ½ to reach the tariff rate. This has caused some of the world’s poorest countries to suffer disproportionately high tariffs based on this questionable formula. Plus, tariffs are imposed on small, uninhabited territories like The Heard and Macdonald Islands, repeating doubts about the logic behind the policy, repeating the more humorous aspects, and creating a ton of penguin memes on social media.
Possible impacts for the Caribbean economy and businesses
However, this is not a laughing matter as all goods exported to the US from CARICOM countries face an additional 10% tariff, except for Guyana, which faces country-specific 38% tariffs. This makes Caribbean products more expensive in the US, but there is a debate that they compete with products from other countries that may receive even higher country-specific fees.
The US has a large trade surplus with the region and most Caribbean countries, with the exception of the goods exporters of Guyana and Trinidad and Tobago. In fact, the US continues to be a key market for several important Caribbean exports, including energy products such as oil, ammonia and methanol, as well as energy products such as rum, textiles and other manufacturing and agricultural products. Since the 1980s, most CARICOM countries’ goods exports to the Caribbean countries are eligible for tax exemption due to the Caribbean Basin Initiative and its compositional laws. This is not a negotiated trade agreement, but a one-sided preference program that enjoyed US bipartisan support in order to benefit US manufacturing, as it is consistently demonstrated by the US International Trade Commission (USITC) on the operation of CBERA.
Her latest articleDr. Kari Grenade, a Caribbean economist, has outlined various ways that could affect the Caribbean economy, including inflation, since the Caribbean imported substantial amounts of US goods, including essential food. Tax Fund Analysis show Trump’s tariffs amount to an average tax increase of over $2,100 per US household in 2025. What does this mean for the Caribbean diaspora in the United States? What does this mean for travelling to the area if US consumers pay more for everyday items and have less disposable income? What does this mean for the Caribbean country, which relies on the United States as the main source of tourism market in the Caribbean?
What’s next? A solid local response
The tariffs have not yet been enforced and could be stopped at the last minute given the rebound and stock market volatility the announcement has caused. Nevertheless, it is essential that businesses and Caribbean countries plan them. For Caribbean exporters who rely on CBI concessions, this may require that they rethink their export strategies by moving towards non-trade market entry strategies to maintain access to the US market or diversifying to new export destinations. For Caribbean companies that rely on input imported from the US, they could face higher costs as US manufacturers hand over costs to intermediate and terminated consumers. This means they have to continue diversifying their sourcing. Some companies have already done this.
Retaliation is not a viable option for CARICOM countries as we import much of what we consume from the US and already have high tariffs on imports. Where feasible, the Caribbean countries have been able to lower their applicable fees for imported goods to offset some of the pain that consumers feel. The other main options are diplomatic, preferably as grouping. The Caribbean government is engaged in diplomatic outreach to rethink its policy for the United States or at least urge the United States to provide sculpture to small countries. recently articleAntigua & Barbuda’s highly respected ambassador to the United States, Ronald Sanders, called on the US to revisit these tariffs, as it violates the spirit of CBI-US relations. In fact, this policy makes US goods more expensive and encourages local importers to source more local or internationally. Furthermore, many Caribbean citizens have customarily gone to the United States, particularly to the city, to vacations and shops, contributing to the economy of those cities. Caribbean citizens are increasingly going to cheap destinations like Panama.
The “America First Trade Policy 2.0” reinforces the need for us at CARICOM to expand intra-regional trade and accelerate our efforts to continue our efforts to diversify trade. This is not novel, it’s something we’ve been aware of for a long time. I listened speech Earlier this week, the market for around 450 million of Ursula von der Leyen’s EU committee chairman, and the economic overlapping EU implementing meaningful retaliatory measures, has also been noted that deeper integration and salience of economic diversification can help build its resilience and navigate this uncertainty. If deeper integration and diversification are important for the EU, then they are doubly important for us at CARICOM. After all, there are not only these tariffs we have to contest, but also the charges for suspects placed on vessels made in China or part of a fleet that have Chinese-made vessels that can affect many Caribbean countries.
The broader concern is this be food your neighbor trade policy by us as the world’s largest economy rests on rules-based multilateral trading systems and the World Trade Organization (WTO), which was important to establish. The multilateral trading rules are not complete, but provide a predictable, rules-based framework, with countries agreeing to bind tariffs at certain levels, ensuring exporters’ predictability. But what the Trump administration is doing is contrary to the spirit of a multilateral trading system, and will spark a world trade war as key economic forces respond to their own retaliatory measures. As history shows, this probably has detrimental implications for the global economy, just five years after the world was hit by the worst pandemic in 100 years. This latest move tells us a more unpredictable, uncertain, unstable, and one-sided era in global trade relations.
Alicia Nicholls, B.Sc., M.Sc., LL.B. He is an international trade specialist and founder of the Caribbean Trade Law and Development Blog. www.caribbeanttradelaw.com.
