By Julian Reid
Bahama Journal News Editor
The Bahamas government has taken action to address the impact of the U.S.-imposed 10 percent tariff on goods entering that country. Prime Minister Philip Davis in a nationally televised address on Wednesday night warned Bahamians to brace themselves because it could mean higher costs and a slowdown in the tourism industry.
“If the 10% tariff on Bahamian goods imported into the United States remains, Bahamian exporters in multiple industries will soon feel the impact,” the prime minister said.
Refraining from sugarcoating the seriousness of the impact of these tariffs and the global trade wars Mr. Davis said, “the new tariffs are likely to cause new inflationary pressures, which would mean higher prices for Bahamian consumers. For a country like ours, higher prices will add to what is already an unbearably high cost of living. We are very concerned about the impact on Bahamian families.”
“Another significant risk to The Bahamas is that a slowdown in the U.S. economy will slow our tourism industry. We will be convening industry leaders as we evaluate options for mitigating the risks we face, if the new tariffs are not significantly unchanged as US policy evolves,” said Prime Minister Davis.
The Prime Minister outlined the action he and his government have taken so far. “I have been talking to leaders of other countries, reaching out to executives in our business community, and consulting with economists and trade experts to assess the likely impact and to plan for multiple scenarios.”
Continuing to brief the Bahamian people on his government’s efforts, Prime Minister Davis said, “We have been in contact with U.S. officials regarding the change in policy, and we are working with fellow Caribbean countries on collective diplomatic efforts. We are also speaking with Bahamian exporters and working to understand whether there are short-term policies we could enact to cushion the fallout.”
Mr. Davis also highlighted his government’s serious approach to trade diversification. “For the first time, our country has in place an agency dedicated to expanding trading opportunities, and a national trade policy. Significant efforts to create new trade relationships were already underway, and those efforts will now be intensified.”
Hoping to give Bahamians some optimism, the prime minister highlighted the work of his government in transforming the country’s energy sector. “One of the key drivers of high prices in The Bahamas, for both families and businesses, has been the cost of electricity, which is why we’ve worked hard to create our country’s first nationwide, comprehensive energy reforms. Much-needed and long overdue upgrades to the electricity grid are underway.”
The cost of food is also a challenge. “In addition, the VAT reduction on all food sold in our markets is providing some relief,” Mr. Davis said. “We will also intensify and speed up our efforts to grow more of what we eat at home.”
To highlight some more positive news, the prime minister reminded Bahamians of the recent Moody’s rating.
“Earlier this week, the international credit agency Moody’s upgraded our country’s credit rating to positive, for the first time in nearly two decades. This was very welcome news – and a reflection of the hard work we’ve done together, to grow our economy, reduce our deficit, implement key fiscal reforms, and tackle rather than ignore our country’s longstanding electricity problems.”
On Wednesday, U.S. president Donald Trump announced that he has placed a 90-day pause on the enforcement of the levy which should give just a bit of breathing room to prepare for the impact of the tariffs.
However, there is another challenge that The Bahamas and other CARICOM nations have hanging over our heads. The United States Trade Representative (USTR) had proposed $1M port fees for Chinese-built ships that dock at US facilities. This caused fear amongst Bahamian and Caribbean traders who said the fee would cause prices to escalate in regional countries.
On April 8, the USTR Jamieson Greer told lawmakers that not all of the agency’s proposed multimillion-dollar fees for Chinese-built ships to dock at U.S. ports will be implemented, and they may not be cumulative. Reuters news agency reports that the implementation of the USTR port fee plan could come as late as November.
It is still not clear what this will mean for The Bahamas and CARICOM. CARICOM through its current Chairperson, Barbados Prime Minister Mia Mottley made an appeal to US President Donald Trump to ward off the imposition of the port fees.
“This trade war and the possibility of a U.S. $1 million to $1.5 million levy on all Chinese made ships entering U.S. harbours will mean higher prices for all of us at the corner shop, higher prices at the supermarket, higher prices at the electronic store … higher prices for us at the restaurant … and beyond,” she said.
The Caribbean Hotel and Tourism Association also made an appeal submitting a substantive document to the USTR titled “Assessing the Impact of Proposed Port Service Fees and Tariffs on the U.S. and Caribbean’s Tourism-Based Economies and Creating New Opportunities to Stimulate Greater Two-Way Trade Between the Region and the United States.”
In its cover letter, the CHTA representing its organization and on behalf of their federation of 32 national hotel and tourism associations throughout the region, and private sector members based in the Caribbean, the United States and globally, said “should the proposed actions being considered be adopted, along with tariffs, without remedies which mitigate their impact, we expect downside consequences for the region and U.S. business interests which rely on a stable and growing tourism industry – both cruise ship and land-based tourism. Our submission offers remedies which will provide mutual benefit as we look to continue to grow our industry for mutual gain.”
