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Guyana was whacked with 38% tariffs on Donald Trump’s April 2 ‘Liberation Day’, but is now breathing a little easier since the tariffs have been put “on pause” for 90 days, to allow individual nations to plead their case in Washington.
According to Donald Trump 75 nations have already got on the phone willing to “kiss my ass” over tariffs.
Originally, Guyana was going to be charged 38% tariffs on many of its exports. For now, it will only pay 10%, the same as most other countries except Canada, China, and Mexico, but there is no knowing if the 38% tariff will come back.
So why was Guyana facing such high tariffs in the first place? Most experts thought that the numbers were just thrown out by a spreadsheet that had been fed with the trade deficits and surpluses between countries, but according to political expert Francis Bailey, it’s because Guyana is caught in a power struggle between the United States and China.
The U.S. is unhappy about China’s growing influence in Guyana. Chinese companies have invested billions in building roads, hospitals, hotels, shopping centers, and a major bridge.
Meanwhile, the U.S. still wants to buy Guyana’s main exports—oil, gold, and bauxite—and these were not going to be taxed. But the higher tariffs would have hurt Guyana’s fishing and sugar industries.
The U.S. also supports Guyana in its border dispute with Venezuela over the large Essequibo region. In March, U.S. Secretary of State Marco Rubio warned Venezuela not to use force.
Bailey says the U.S. is sending a message: if Guyana wants protection, it needs to reduce ties with China. He believes Trump is using this as a way to pressure Guyana into choosing sides.
The Guyanese government didn’t comment. But the country, once very poor, has become much richer since discovering oil in 2015. Last year, it exported over $3 billion in crude oil to the U.S. As a result of increased income, the Guyanese government has been spending heavily on many social programs in health and education and on infrastructure such as roads, bridges, and the power network.
Now, all Caribbean nations will face a 10% tariff on their exports to the U.S. However, the bigger concern is the rising cost of imports from the rest of the world that arrive in the Caribbean via the USA.
Caribbean nations rely heavily on U.S. goods. Some islands import up to 70% of their consumer products from the U.S. If the prices of American products rise, this will hit consumers hard.
Also, many goods from other countries come through the U.S. Because Trump raised tariffs on Chinese goods to 125%, anything from China sent through the U.S. to the Caribbean will also become more expensive.
With shipping costs already high, and many people earning low wages, these new tariffs could make everyday goods much more expensive.
In Antigua and Barbuda, designer Carissa Warner says 70% of her materials come from the U.S., and 20% from China. Some of her projects are on hold. She’s even thinking about growing her own food because she fears prices will rise.
She believes one solution is for Caribbean governments to lower their own import duties, which are based partly on the cost of goods.
Prime Minister Gaston Browne of Antigua and Barbuda said the tariffs are “extremely worrisome” and urged people to “buy smarter and buy local.”
These tariffs come at a bad time. The Caribbean is still dealing with the effects of natural disasters and the Covid-19 pandemic.
Antigua and Barbuda’s U.S. ambassador, Sir Ronald Sanders, says the U.S. has long benefited from selling more to the Caribbean than it buys. He says the Caribbean’s big mistake was relying too much on the U.S. and not finding other trade partners.
Still, he doesn’t think the 10% tariff will stop Caribbean goods from entering the U.S. The region mostly exports niche products like rum and tropical fruits that the U.S. doesn’t produce.
People are also worried about a possible new tax of $1.5 million on Chinese ships entering U.S. ports. This could raise Caribbean shipping costs even more.
Sir Ronald says the Caribbean needs to diversify its markets, but this won’t be quick or easy. Trade is mostly done by the private sector, and much of what the Caribbean buys still comes through the U.S.
Caribbean leaders believe the best way to deal with the situation is to work together as a group.
Mia Mottley, Prime Minister of Barbados and head of Caricom, said the region is going through its hardest times since independence. She wants the Caribbean to become more self-sufficient, especially in agriculture and light manufacturing.
She also says the region should build stronger ties with Africa, Latin America, the UK, Europe, and Canada, and stop depending so much on the U.S.
Her message to the U.S. was clear: “We are not your enemy. We are your friends.”
Sources: BBC, Stabroek News.
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