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  • US ‘Liberation Day’ Tariffs: What impact for the Caribbean?

    US ‘Liberation Day’ Tariffs: What impact for the Caribbean?

    Alicia Nicholls

    On April 2, 2025, United States (US) President, Donald J. Trump, announced additional ad valorem tariffs of 10% on goods imports from all countries, including Caribbean Community (CARICOM) countries, under his new ‘Reciprocal Tariff Policy’. In addition, some countries like Guyana, which have a merchandise trade surplus with the US, will face even steeper additional tariffs. This article discusses these ‘Liberation Day’ developments and what they might mean for CARICOM countries.

    The Reciprocal Tariff Policy

    Earlier this year, on January 20, 2025, President Trump signed a presidential memorandum outlining the broad contours of his America First Trade Policy 2.0, initiating an investigation into the root causes of the country’s “large and persistent” merchandise trade deficit. This was followed by a second executive order, the Presidential Memorandum on Reciprocal Trade and Tariffs issued on February 13, 2025, which ordered a review of non-reciprocal trade practices and their contribution to the U.S. trade imbalance. On April 1, 2025, the President received the results of these investigations.

    The executive order of April 2, 2025 entitled “Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that contribute to large and persistent annual US goods trade deficits” introduces the so-called Reciprocal Tariff Policy as a response to the national emergency supposedly caused by foreign trade and economic practices.

    Using presidential authority pursuant to the International Emergency Economic Powers Act of 1977 (IEEPA), this policy applies an additional ad valorem duty starting at 10% on imports from all of the US’ trading partners, effective April 5, 2025 at 12:01 am (EDT). For countries in Annex I, these tariffs will increase to the country-specific rates outlined in that annex effective April 9, 2025 (EDT). For Guyana, the only Caribbean Community (CARICOM) country on Annex I, its goods exports to the US will be hit with additional ad valorem tariffs of 38%.

    These tariffs are to remain in place indefinitely, until the President determines that the conditions warranting them have been “satisfied, resolved, or mitigated”. Additionally, the President has the authority to increase the tariffs if the countries retaliate. A narrow range of goods listed in Annex II of the Memorandum is exempt from the ad valorem tariffs.

    These new ‘reciprocal’ tariffs aim to address what the Trump Administration perceives as chronic non-reciprocity in the US’ trade relationships, hampering U.S. manufacturers’ ability to compete in foreign markets and thereby threatening American jobs, manufacturing capacity, and competitiveness. However, the methodology used to determine these tariffs has faced criticism. If it is to be a so-called ‘reciprocal’ tariff, the initial thinking by many of us in the trade policy community was that the US would match the tariffs charged by these countries on US imports. Rather, according to financial journalist James Surowiecki in a post on X and later confirmed by economists and the administration, the formula for calculating the additional tariffs appears to involve simply dividing a country’s trade balance with the U.S. by the value of its exports to the US multiplied by ½ to arrive at the tariff rate. This has led to some of the poorest countries in the world being hit with disproportionately high tariffs based on this dubious formula. Moreover, tariffs have even been imposed on small uninhabited territories like the Heard and McDonald Islands, reiterating doubts about the logic behind the policy and on the more humorous side, giving rise to a raft of penguin memes on social media.

    Possible implications for Caribbean economies and firms

    However, this is no laughing matter as all goods exported from CARICOM countries to the U.S. will now face the additional 10% tariff, except for Guyana which faces a country-specific 38% tariff. This makes the costs of Caribbean products more expensive in the US, although there is the argument that they will also be competing with goods from other countries which might be subjected to even higher country-specific rates.

    The US has a large trade surplus with the region on a whole, and with most Caribbean countries, with the exceptions of the commodity-exporting countries of Guyana and Trinidad & Tobago. Indeed, the US remains a key market for several important Caribbean exports, including energy products like oil, ammonia and methanol, as well as rum, textiles and other manufactured and agricultural products. Since the 1980s most CARICOM countries’ goods exports to the US are eligible to enter duty-free due to the Caribbean Basin Initiative and its constituent Acts. This is not a negotiated trade agreement, but a unilateral preferences programme which has enjoyed bipartisan US support because it benefits US manufacturing as the biennial US International Trade Commission (USITC) reports on the operation of the CBERA have consistently shown.

    In her latest article, noted Caribbean economist Dr. Kari Grenade outlined a variety of ways in which these developments could impact Caribbean economies, including inflation as since the Caribbean imports a significant volume of US goods, including essential foodstuffs, this could lead to rising prices on our supermarket shelves. Analysis by Tax Foundation shows that the Trump tariffs amount to an average tax increase of more than $2,100 US per US household in 2025. What does this mean for the Caribbean diaspora in the US? What does this mean for Americans’ travel to the region if US consumers will be paying more for everyday goods and will have less disposable income ? What does this mean for those countries in the Caribbean which depend on the US as a major tourism source market?

    What next? Firm and regional responses

    The tariffs have not yet come into effect, and it is likely that they could be halted at the last minute given the backlash and stock market volatility the announcement has caused. Nonetheless, it is imperative for firms and Caribbean countries to plan for them. For Caribbean exporters which rely on the CBI concessions, this may necessitate rethinking export strategies, possibly by shifting to non-trade market entry strategies to maintain access to the U.S. market, or by diversifying into new export destinations. For those Caribbean companies which rely on inputs imported from the US, they could face higher costs as US manufacturers pass on their increased costs to intermediate and end consumers. This means they will have to continue to diversify their sourcing. Some firms are already doing this.

    Retaliation is not a feasible option for CARICOM countries as we import much of what we consume from the US and already have high tariffs on imported goods. Where feasible, Caribbean countries could lower their applied rates on imported goods to help offset some of the pain consumers would feel.  Our other main options are diplomatic, preferably as a grouping. Caribbean governments have been engaging in diplomatic outreach to urge the US to reconsider the policy or at least provide carve-outs for small countries. In a recent article, Antigua & Barbuda’s highly respected Ambassador to the US, Sir Ronald Sanders, has called on the US to revisit these tariffs as they are against the spirit of the CBI and US-Caribbean relations, have human and economic costs and also imperil US strategic interests. Indeed, this policy will make the price of US goods more expensive and further incentivise importers in the region to source more regionally or internationally. Moreover, many Caribbean nationals have customarily gone to the US, especially cities like Miami and New York, to vacation and shop, contributing to the economies of those cities. Caribbean nationals will increasingly go to cheaper destinations like Panama.

    The ‘America First Trade Policy 2.0’ reinforces the need for us in CARICOM to accelerate efforts to expand our intra-regional trade and continue our trade diversification efforts. This is nothing novel and it is something we have long recognised. I listened to the speech of EU Commission President, Ursula von der Leyen earlier this week and found it noteworthy that the EU, a market of some 450 million people and with the economic heft to implement meaningful retaliatory measures also saw the salience of deeper integration and economic diversification to helping build its resilience and navigate this period of uncertainty. If deeper integration and diversification are important for the EU, they are doubly vital for us in CARICOM. After all, it is not just these tariffs we must contend with, but also the mooted fees to be placed on vessels which are Chinese made or are part of fleets which have a large number of Chinese-made vessels, which could impact many Caribbean countries.

    A broader concern is the pall this beggar thy neighbour trade policy by US as the world’s largest economy casts over the rules-based multilateral trading system and the World Trade Organisation (WTO) which it was critical in establishing. While the multilateral trading rules are far from perfect, they have provided a predictable and rules-based framework where, inter alia, countries agreed to bind their tariffs for tariff lines at specific levels, which ensures some predictability for exporters. However, what the Trump administration is doing is contrary to the spirit of the multilateral trading system and will set off a global trade war as major economic powers react with their own retaliatory measures. As history shows, this will possibly have deleterious implications for the global economy, and just a mere five years after the world was hit by the worst pandemic in 100 years.  This latest move heralds a more unpredictable, uncertain, unstable and unilateral era in global trade relations, one in which strategic diplomacy, regional cooperation and diversification will be key for CARICOM countries to navigate.

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is an international trade specialist and the founder of the Caribbean Trade Law and Development Blog: www.caribbeantradelaw.com.

  • Caribbean-African Trade: The Unfinished Bridge

    Caribbean-African Trade: The Unfinished Bridge

    Ashley Williams, Guest Contributor

    The Premise

    History left a fracture where a bridge should have been. The Caribbean and Africa—two regions tethered by blood, yet disconnected by trade.
    For centuries, we have exchanged culture, music, and resilience, but not commerce at scale. That was by design.

    Today, we are positioned to correct that. Not as an afterthought, not as a side conversation, but as a deliberate economic force.
    The Caribbean and Africa are two sides of the same coin—one rich in resources, the other rich in financial infrastructure and global access.

    The question is not if this bridge will be built. The question is who will control its foundation.

    The Case for Reconnection

    For decades, Caribbean nations have been locked into trade cycles dictated by former colonial powers.  Our largest exports still head to North America and Europe.
    Our tourism models remain dependent on Western economies. Even our food supply is largely imported from outside the region.

    Africa, too, has been locked into extractive economic relationships—its vast resources flowing outward, while financial control remains offshore.
    China, the EU, and the U.S. have embedded themselves as dominant players in African trade. Yet, the Caribbean is absent. Why?

    Because we have not yet moved as a collective force. But when we do, the system changes.


    Strategic Synergies: What We Bring, What They Bring

    Caribbean economies are small but agile. We are financial architects. We design offshore structures, manage global wealth, and maneuver regulatory frameworks like second nature.
    Africa, on the other hand, is  a sleeping giant—a landmass of opportunity, with raw materials, energy potential, and scale.

    The synergy is undeniable. The Caribbean is the financial brain, Africa is the industrial body.


    1. Financial Infrastructure & Alternative Investment 


    The Bahamas is a financial powerhouse—one of the world’s most recognized offshore banking hubs. Africa is experiencing a fintech revolution, leapfrogging traditional banking systems.

    – Caribbean Strength: We control regulatory frameworks, offshore finance, and structured investment models. 
    – African Strength: Digital banking, mobile finance, and large-scale investment needs. 
    – Opportunity: A Caribbean-African sovereign wealth fund that structures investments in real estate, energy, and infrastructure across both regions. 

    2. Renewable Energy & Power Independence
    Both regions suffer from high energy costs and dependency on fossil fuels. Africa has solar farms the size of cities, untapped hydroelectric power, and access to rare minerals needed for battery storage. 

    – Caribbean Strength: Expertise in solar-powered desalination, grid management, and sustainable energy policies. 
    – African Strength: Raw materials, large-scale renewable energy projects, and battery storage potential. 
    – Opportunity: Co-owned energy companies** that provide off-grid power solutions for both regions—drastically reducing reliance on external energy suppliers. 

    3. Food Security & Agricultural Trade 
    The Caribbean imports **80% of its food.  That is a liability. Africa has the land and the output to close this gap. 

    – Caribbean Strength: Trade logistics, duty-free zones, and financial structuring. 
    – African Strength: Large-scale agricultural production, natural farming conditions. 
    – Opportunity: A direct agricultural pipeline, moving fresh, organic African produce into the Caribbean food supply chain. 

    4. Real Estate & Infrastructure Development 
    Both regions have a real estate boom, but capital access remains a challenge. The Bahamas understands luxury development and foreign direct investment. Africa needs urban expansion and commercial real estate projects. 

    – Caribbean Strength: Investment-friendly real estate laws, residency incentives, and luxury market expertise. 
    – African Strength: High demand for commercial and residential expansion. 
    – Opportunity: A Caribbean-African Real Estate Fund that funnels investment capital from both regions into large-scale developments.


    Breaking the Barriers: The Playbook 

    This is not a matter of potential, but of execution. The barriers are not structural; they are psychological and logistical.

    1. Trade Agreements & Economic Alignment 
    The African Continental Free Trade Area (AfCFTA) exists. CARICOM exists. The link between the two is missing. 
    Bilateral agreements must eliminate tariffs, streamline import/export regulations, and incentivize direct Caribbean-African trade flows.

    2. Direct Shipping & Air Cargo Routes 
    Right now, Caribbean-Africa trade requires detours through Europe or the U.S. That is not sustainable. We need dedicated trade hubs in The Bahamas, Barbados, and Jamaica to serve as logistical entry points for African goods. 

    3. Digital Trade & Blockchain Integration 
    Africa leads in mobile banking. The Bahamas leads in blockchain-friendly regulation. Smart contracts, blockchain-based supply chain verification, and digital trade platforms can bypass traditional barriers and create frictionless commerce. 

    The Bahamas as the Financial Bridge 

    The Bahamas is uniquely positioned to be the Caribbean-African trade epicenter. It is one of the world’s most respected financial jurisdictions, a tax-neutral hub, and a global player in wealth management and fintech.

    What must happen next? A formalized Caribbean-African Investment Forum. A platform that: 

    – Connects investors with African-Caribbean projects.
    – Structures investment vehicles for real estate, energy, and agriculture. 
    – Expands digital banking solutions to enable smooth financial transactions. 

    The Bahamas can lead this movement. Not by asking permission, but by building the infrastructure.

    Conclusion: The Shift is Inevitable 

    This is not just about trade. This is about rewiring the economic power flow. 
    For too long, both regions have been extraction zones—raw materials, cheap labor, offshore finance—flowing outward, never cycling back. 

    The cycle ends here.

    This is about control. Control of capital, control of supply chains, control of our economic future. 

    Africa is rising. The Caribbean is evolving. And when these two forces align, the game resets. 

    The only question that remains is: Who moves first?

    Ashley Williams is an attorney, strategic visionary, and key figure in the rise of The Bahamas and the founder of WilliamsAdvise.

  • CARICOM’s Trade Deals: Are They Working for Us?

    CARICOM’s Trade Deals: Are They Working for Us?

    It is a provocative question but one which came to mind (not for the first time) as I read that Caribbean Community (CARICOM) leaders have launched a ‘comprehensive review’ of the region’s trading relationship with the United States of America (US). This was one of the major announcements from the recently concluded 48th Regular Meeting of Caribbean Community (CARICOM) Heads of Government in Barbados February 19-21, 2025 under the theme ‘Strength in Unity: Forging Caribbean Resilience, Inclusive Growth and Sustainable Development’. A necessary and timely move given the significant shifts in US trade policy, it should also serve as a wake-up call for CARICOM to adopt a culture of regular reviews of all its trade agreements and arrangements, with the findings not just for internal use but for all the region’s stakeholders to access.

    CARICOM countries are signatories to a number of trade arrangements and agreements with external partners, mostly as part of CARICOM. However, notably Trinidad & Tobago and Belize for example, have negotiated and signed a few partial scope agreements with external partners on their own. Most CARICOM countries enjoy duty-free access to the US market for their goods under the Caribbean Basin Initiative and its constituent legislation, such as the Caribbean Basin Economic Recovery Act (CBERA) and the Caribbean Basin Trade Preferences Act (CBTPA). CBI is a unilateral arrangement, that is, it is a result of legislation passed by the US Congress and not a negotiated trade agreement. It is also non-reciprocal in that beneficiary countries are not required to extend the same treatment to US goods. The extent to which this will still be the case is something I have discussed elsewhere.

    We also have a similar arrangement with Canada under CARIBCAN. This, like the CBERA, is subject to periodic World Trade Organisation (WTO) waivers. CARICOM countries also have trade agreements with the European Union (EU) and the United Kingdom (UK) through CARIFORUM, as well as with Colombia, Costa Rica, Cuba, Dominican Republic and Venezuela. These latter are mostly partial scope agreements. At one point the region was negotiating a trade agreement with Canada but these negotiations were eventually shelved.

    Unfortunately, many of CARICOM’s trade agreements have remained largely unexamined in terms of their development impact. At least, if such reviews have been conducted, this information has not been made publicly available for the most part. While the US conducts biennial reviews of the Caribbean Basin Economic Recovery Act (CBERA) as is going on right now, and the European Union regularly assesses its trade agreements, CARICOM does not appear to have institutionalised a similar approach. Right now, the most comprehensive publicly available information on the operation of our agreements is published in reviews by our partners and not by us. This must change.

    However, one of the most comprehensive reviews of CARICOM’s trade agreements, conducted by two renowned regional economists McClean and Khadan (2015), found that the region’s trade agreements are generally underutilized, leading to poor intra-regional and extra-regional trade performance. The reasons range from a lack of awareness among businesses to challenges in meeting market entry requirements and supply-side constraints.  

    Regular reviews of its trade arrangements and agreements would allow CARICOM to have evidence-based interventions to improve our trade performance and to assess the real development impact of these agreements. Have they led to increased exports and increased export diversification? Have they strengthened our industries and led to job creation? What are the major challenges our exporters face in each of these markets? How can we better leverage the diaspora in these markets? Are our current agreements still fit for purpose given the new sectors we are exploring? Without this information, it is impossible to determine whether these agreements are truly serving the region’s economic interests and what, if any, future trade agreements we should seek to conclude. Moreover, these assessments should be data-driven. Addressing the chronic issue of data scarcity in the Caribbean is essential for making informed decisions that strengthen our trade policy. To achieve this, the private sector and academia must play a key role in the review process. Since businesses are the ones actively engaged in trade, their input—whether through surveys or interviews—is vital for conducting comprehensive empirically-sound evaluations. Meanwhile, academia offers a wealth of scholarly research on the region’s trade performance, providing valuable insights that can inform policy decisions.

    Beyond merely conducting reviews, CARICOM must also ensure that the findings are made publicly available. Transparency in trade policymaking is crucial for fostering public trust and allowing businesses, academia and civil society to engage meaningfully in shaping evidence-based trade policy that redounds to regional development. Citizens and the private sector must be able to see how these agreements impact their livelihoods. While the hard-working team at CARICOM has increased the visibility of their work, too often it still feels like what happens at the regional level is far-removed from the every day citizen.

    I warmly applaud the decision to review the CARICOM-US trading relationship, but this should not be an isolated exercise. The global trade landscape is rapidly changing, and CARICOM cannot afford to be reactive. Instead, this must be the start of a broader initiative to systematically monitor and evaluate all of CARICOM’s trading arrangements. Only through such an approach can CARICOM ensure that its trade agreements are truly working in the best interest of the region’s economies and people and contributing to resilience, inclusive growth and sustainable development.

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade policy specialist and founder of the Caribbean Trade Law and Development Blog: www.caribbeantradelaw.com.

  • US Tariff Wars: What possible impact for the Caribbean?

    US Tariff Wars: What possible impact for the Caribbean?

    Alicia Nicholls

    What a time to be an international trade analyst! That was my first thought after reading the latest memorandum dated February 1, 2025, announcing sweeping tariffs on America’s three biggest trading partners—Canada, Mexico, and China. Well-known for using tariffs as a tool for geopolitical ends, President Donald J. Trump is justifying these latest measures as part of a national emergency he declared against illegal immigration and drug trafficking under the International Emergency Economic Powers Act (IEEPA). This Act, signed in 1977, allows the President broad powers to regulate commerce after declaring a national emergency.

    These aggressive trade moves, the latest in Trump’s America First Trade Policy 2.0, are in fulfillment of promises he made on the campaign trail and expand on his first-term tariffs on China (which President Biden largely maintained). In his first term he had also announced 25% tariffs on steel imports and 10% on aluminum imports from the European Union (EU), Canada and Mexico. Canada and Mexico are not just the US’ largest trading partners, but are its treaty partners under the U.S.-Mexico-Canada Agreement (USMCA), the agreement that replaced the North America Free Trade Agreement (NAFTA) during Trump’s first term and which is due for review in July 2026 under its review clause.

    What do these new tariffs involve?

    Yesterday, President Trump announced a 25% additional tariff on imports from Canada and Mexico and a 10% additional tariff on imports from China, and has also vowed to increase these tariffs should these countries retaliate.

    This move will of course hurt those countries, affecting manufacturers and also jobs. But Trade 101 is that tariffs also mainly hurt consumers in the country imposing them – the US in this case! Billions of dollars in trade occurs among USMCA countries each year, with tightly interwoven supply chains, especially in the automobile, agriculture, textiles and other industries. Indeed, U.S. goods and services trade with USMCA totaled an estimated $1.8 trillion in 2022, according to the Office of the US Trade Representative (USTR). This means that many of the goods on American shelves come from these countries or were made with inputs sourced from these countries. Therefore, American manufacturers will pay higher costs for raw materials and intermediate goods sourced from these countries and higher business costs which they will likely pass on to consumers. The end result is that American shoppers and businesses will pay higher prices for everyday goods, an ironic state of affairs given that reducing these costs was said to be one of the reasons the American public voted for President Trump.

    For their part, both Canada and Mexico have announced retaliatory measures of their own yesterday. Outgoing Canadian Prime Minister, Justin Trudeau, announced in a press conference last evening a 25% tariff on 155 billion (Canadian dollars) of US goods, while Mexican President Claudia Sheinbaum indicated that Mexico will be implementing retaliatory measures as well.

    Trump has also again threatened to hit the EU with tariffs, and Colombia following a row over Colombia’s insistence that its deportees be returned with dignity. Trade wars among the world’s major powers threaten global economic stability, as the International Monetary Fund (IMF) warned in October last year, even before Donald Trump was re-elected but in the amidst of tariff threats he made on the campaign trail.

    They’ll Hit Caribbean Consumers too

    Caribbean manufacturers, which depend on US inputs, will likely face higher prices and business costs, while we end consumers might spend more for American-made food, cars, electronics and the like. However, there are ways in which we could seek to combat this to the best that we can. Caribbean manufacturers should, to the extent possible, continue to explore alternative suppliers to mitigate against these possible price hikes. This state of affairs also makes the case for more intra-Caribbean sourcing. After all, instead of sourcing so much of our fresh fruit from Florida, we could be sourcing these from within the region more.

    Final Thoughts

    Trump’s tariffs may be aimed at Canada, Mexico, and China, but the ripple effects will be felt far beyond in the possible form of higher prices and business costs, supply chain disruptions and economic uncertainty. Our jobs as trade analysts have never been more important as we help the Caribbean businesses and governments we advise to stay informed, and ready to adapt in an increasingly unpredictable global trade landscape.

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is an international trade specialist and the founder of the Caribbean Trade Law Blog. Learn more about her work at http://www.caribbeantradelaw.com.