The Dr Andrew Holness-led administration is urging local businesses to look to new markets amid the Trump administration’s imposition of a 10 per cent tariff on Jamaican exports to the United States even as it seeks “urgent clarification”.
The tariff takes effect today.
Holness, who was speaking at EXPO Jamaica’s opening ceremony at the National Indoor Sports Centre on Thursday, said nearly 90 per cent of Jamaican exports to the United States enter under preferential terms.
He said that while the Government has not yet received formal notification on the precise implementation procedures – including whether the new tariff will override existing Caribbean Basin Initiative provisions – it is actively engaging with US trade representatives “to seek urgent clarification”.
This comes a week after US Secretary of State Marco Rubio’s visit to the island, which formed part of a two-day trek through the Caribbean.
Technical assessment
Holness said his administration is conducting a detailed technical assessment to fully understand the scope of the tariff and its implications for Jamaica’s trade and industrial policy.
“It is important to emphasise that these developments do not reflect any erosion in the long-standing and strong bilateral relationship between Jamaica and the United States. Rather, it reflects a broader recalibration of US trade policy that is global in scope,” said Holness.
“Still, we will use every available diplomatic channel, including working with our CARICOM brothers and sisters and utilising the Office of Trade Negotiations, to seek to preserve the positions of export that have been secured over decades of deepening trade ties with the United States,” the prime minister said.
He said preliminary analysis indicated that some of Jamaica’s top exports might fall under exempted product categories and that the Government was working to confirm and, where possible, expand these exemptions.
Further, Holness said that there were opportunities to be found in the face of the tariffs, stressing the need to be proactive and prospective.
“So, to our manufacturers and exporters, we understand the uncertainty this announcement has created, and we are with you every step of the way. You are not only integral to our economic strategy. You are a national champion of our resilience and ingenuity.
“The Government will continue to advocate on your behalf and ensure that your interests are protected in any new global-trade architecture,” he said.
Holness said the Government was aware that the tariff could have long-term impact, noting that the administration started planning long ago.
“… I play chess, not draughts. Maybe a decade ago, the word ‘disruptive’ would have been an inherently bad thing. In today’s world, you require disruption of systems for there to be innovation and new opportunities. So while as we see the downside of the disruptive global order that we have known, we are not going to sit by and wait.
“There are opportunities that must be had. There are prospects to be uncovered, and so I urge my manufacturers – my business people – before you start to look at the negative, also look for the opportunities. Don’t just sit down and say, you know, complain about all the things that’s going on and all the things that’s going bad, expecting that Government is going to solve all the problems for you. Be the entrepreneur, be the one who is the risk taker, be the one who is looking for the opportunity,” he said.
Meanwhile, economist Keenan Falconer has concluded that the imposition of the 10 per cent import tariffs on Jamaican exports effectively means that it will be more expensive for US importers to bring Jamaican products into their country.
In this instance, he said Jamaican exporters have the option of reducing their export volumes or lowering prices in order to remain competitive in the American market.
However, he said depending on the elasticity of the products being exported, the expected reduction in export revenues may be mitigated.
Falconer said that with respect to food and beverage exports in particular, the American market includes many Jamaicans in the diaspora who are willing to purchase items for reasons other than price such as cultural and quality considerations as well as the lack of suitable substitutes.
“Therefore, those products could be said to be price inelastic and would hold up well against the imposition of tariffs. Jamaican non-food exports may be a little more price elastic, and consumption could shift away from them to alternatives from other countries.
“However, I think the new tariff regime opens opportunities to consider further diversification away from the American market, both for exports and engaging directly with countries for imports without the US as an intermediate destination,” Falconer told The Gleaner.
