Caribbean Trade Crisis Looms

Introduction to the Crisis

BRIDGETOWN, Barbados, CMC – Prime Minister Mia Mottley is urging the United States to avert a Caribbean trade crisis as the North American country moves towards implementing a policy to impose a port fee of one million US dollars per port call on any Chinese-built vessel calling at US ports

“What we potentially face with the announced cess—levy, whatever you want to call it—on ships made in China will have serious and deleterious consequences for the commerce not just of Barbados, not just of the Caribbean, but also for Florida,” Mottley said, as she addressed the opening of Courts’ new superstore at Welches on the south coast of the island on Thursday night.

Background to the Crisis

The US government’s investigation into China’s dominance in shipbuilding, maritime, and logistics started under the Biden administration. The United States Trade Representative (USTR) issued its findings in January.

In a statement on February 21, the USTR said that “to obtain the elimination of China’s acts, policies, and practices, and in light of China’s market power over global supply, pricing, and access in the maritime, logistics, and shipbuilding sectors, USTR proposes to impose certain fees and restrictions on international maritime transport services related to Chinese ship operators and Chinese-built ships, as well as to promote the transport of US goods on US vessels.”

The high proposed fees are a way to channel more shipbuilding back to the United States.

Reactions from the Caribbean

Earlier this week, St Vincent and the Grenadines Prime Minister Dr. Ralph Gonsalves warned that if the policy is implemented, “it will be one of the most severe blows to the economies of the Caribbean,” saying, “I don’t want to be hysterical”.

On Wednesday, Mottley met in Jamaica with the United States Secretary of State, Marco Rubio, to discuss the matter. Mottley also wrote to US President Donald Trump as CARICOM chair, seeking an exemption for the region.

Impact on the Caribbean Economy

Mottley said that Caribbean countries depend on regular imports, often operating on a seven-day supply cycle for food, equipment, and critical goods. The proposed tariff could raise the cost of a 20-foot container by US$1,500 to US$ 2,000 and up to US$4,000 for a 40-foot container.

“That cost would eventually be passed on to businesses and consumers. It could also force many to seek alternate shipping routes with higher logistical challenges,” Mottley told the audience as she highlighted the interdependence between Florida’s economy and the Caribbean.

She warned that disruptions in trade would hurt small island states and impact logistics providers and port operations in the southeastern United States.

Building Economic Resilience

Mottley said the proposed tariff represents an immediate threat, highlighting the importance of strengthening economic resilience. She referred to her administration’s recent move to establish a National Resilience and Regeneration Fund, financed by a portion of public sector salaries, to help the country absorb future shocks.

“Barbados must seek to build a buffer that is strong enough that we can accommodate not just high-gale force winds, but disruptions that are beyond our contemplation,” she said, adding that innovative debt clauses and resilience funding were no longer optional but necessary tools as the world continues to face complex and unpredictable challenges.

Conclusion

The proposed tariff by the US government poses a significant threat to the Caribbean economy, and it is essential for the region to seek exemption and build economic resilience to mitigate the impact of such disruptions.

Frequently Asked Questions

Q: What is the proposed tariff by the US government?

A: The proposed tariff is a port fee of one million US dollars per port call on any Chinese-built vessel calling at US ports.

Q: How will the proposed tariff affect the Caribbean economy?

A: The proposed tariff could raise the cost of imports, disrupt trade, and impact logistics providers and port operations in the southeastern United States.

Q: What is being done to address the issue?

A: Prime Minister Mia Mottley has met with the US Secretary of State and written to the US President seeking an exemption for the region, and her administration has established a National Resilience and Regeneration Fund to help the country absorb future shocks.