The views expressed herein are solely those of the writer.
By Dr. Emmanuel Quashie.
Trump’s so-called “Liberation Day” saw the announcement of reciprocal tariffs on 180 countries. Small island developing states like St Vincent and the Grenadines, Barbados, Grenada, and Jamaica, among others, were hit with a 10% tariff, while developed countries like China, as well as Vietnam and Taiwan, were hit with higher tariffs: 34%, 46%, and 32%, respectively. Intergovernmental organizations like the European Union were hit with a 20% tariff.
However, there is quite a lot of misinformation and confusion regarding Trump’s tariffs information. The image posted by the White House on their official X (formerly Twitter) account shows the tariffs countries like China or organisations like the EU is effectively charging the US. But, there’s a problem. Apparently, it’s not the actual tariffs that these countries are charging the US. For example, Trump’s “reciprocal” tariffs (e.g., China 67%, EU 40%) aren’t based on actual foreign tariffs (WTO: China 7.3%, EU 5.2%) but likely on the U.S. trade deficit divided by imports (e.g., China: 279B/427B=65%). For further elaboration, according to an article written by Alicja Hagopian and Millie Cooke in The Independent, “in 2024, the US exported just $143.5 billion in goods to China, while buying $438.9 billion in return. This makes China the largest trade deficit with the US of any country.” Hence, the US imported 3x more goods from China in 2024. So, it is likely that Trump is including US trade deficit with China in his tariff’s calculation.
As a matter of fact, A report conducted by the Cato Institute reveals how Trump’s administration claims regarding the trade-weighted average tariff rates in most countries are much lower. The report is based on trade-weighted average duty rates from the World Trade Organization in 2023. A snapshot of the White House calculations juxtaposed with WTO trade-weighted average (data from 2023) shows the huge difference between the two. For example, Trump’s poster shows China charges a tariff of 67%, but actual data from WTO shows it’s only 3%, +64 points difference. The same for Guyana, the White House calculation shows Guyana charges a tariff of 76%, however, data from the WTO reveals it’s only 13%, a +63 points difference. The list goes on.
International Political Economy: Economic Nationalism
Friedrich List is credited as the founding father of Economic Nationalism, and the author of The National System of Political Economy. Friedrich List also saw the importance of the State taking certain actions such as implementing protectionist policies to give its citizens who invest their capital, employs their productive powers, and devote their bodily and mental powers to the nation’s economy certain guarantees and protections from outside competition while encouraging foreigners to invest their productive powers in the state – all in the best interest of the state. For List, it was all about maximizing the wealth and power of the nation state. In Fredrich List fashion, as US President Trump announces tariffs for foreign countries and simultaneously asks countries like Saudi Arabia to invest in America. In fact, just a few days after taking office, Trump said that he would ask the Saudi kingdom to increase its U.S. investment, saying he would ask the Saudis to “round out” their promised $600 billion “to around $1 trillion”.
What is likely going to happen over the coming months and years, is that countries will find alternative solutions to counter Trump’s unilateral wide-ranging tariffs that are in violation of non-binding WTO rules as it relates to trade in goods, services and intellectual property. The solutions that countries implement may be temporary and, in some cases, even permanent that will have a long-term impact on American consumers and businesses. For instance, there is already fears among US farmers following Trump’s tariffs on China and China’s retaliatory tariffs that they would lose one of their biggest markets. To put this into perspective, roughly 50% of the US largest agricultural export to China – soybeans – totalled $12.8 billion in 2024, according to Hellenic Shipping News Worldwide. Thus, soybeans product will likely be one of the hardest hit by China’s retaliatory tariffs following Trump’s “Liberation Day” trade war.
Politically, it may hurt the Trump-dependent Republican Party, given that a vast majority of farming-dependent counties overwhelmingly supported Donald Trump in the 2024 Presidential Election by an average of 77.7%, according to Ben Felder, Investigate Midwest. It may likely result in a massive swing vote from the same farming-dependent counties from the Republican Party to the Democratic Party. In fact, we can draw upon historical lessons: the Great Depression is also deemed as one of the most “disastrous downturn in the U.S. economy” that resulted in an unprecedented rise in non-military federal spending via Roosevelt’s “New Deal” and even a dramatic swing of voters from the Republican Party to the Democratic Party – “the New Deal Realignment.
The Caribbean will also feel the pain of Trump’s tariffs as it will most likely result in higher import prices that will be passed onto the consumers, and it will be detrimental to our agricultural and fisheries sectors. In support of this, St Vincent and the Grenadines Minister of Finance, Camillo Gonsalves, in an article in the Guardian Newspaper, stated: “We import many, many products, fruits, vegetables, manufactured goods, meats … cement, steel, through Miami and other US ports. . . And not all of those products are of American origin … but it’s a convenient point of transit for the Caribbean.” This statement from the finance minister is crucial within the context of the Caribbean and Trump’s supposedly main targets of his trade war, given that Chinese-built ships and companies do play a crucial role in terms of the Caribbean, with China even being a major builder of small containerships and a key trading partner for many Caribbean nations. For example, “in Santiago de Cuba, China Communications Construction Company modernised the port in 2017 by increasing the quay’s depth for the entry of larger vessels, and it is also present in the Bahamas, Hutchinson Whampoa with three wharfs, including one for cruise ships, according to Carlos de León of Observatorio Económico Latinoamericano (OBELA), a Latin American economic observatory. Moreover, in Trinidad and Tobago, Port of Spain and Point Lisas, are also key destinations for shipments arriving from China, with goods typically transported from major Chinese ports like Shanghai, Ningbo, and Shenzhen. More importantly, China’s trade with the Caribbean has moved beyond negligible trade relations in the 1990s to becoming one of the region’s top trading partners for serval countries, including Barbados, Cuba, Guyana, Trinidad and Tobago, among others. For example, in 2021, China’s exports to the aforementioned countries were valued at roughly $9 billion, according to Dr. Scott B. MacDonald the Chief Economist for Smith’s Research and Grading.
An obvious viable solution for the Caribbean will be to strengthen more South-South relationships, as well as to try and negotiate a more favourable trade package with the United States. The latter option is less likely to get anywhere close to any satisfactory terms for the Caribbean countries characterized by limited resources, small size, and vulnerable economies that are also prone to exogenous shocks. In other words, we lack the material resources to negotiate from a strong position, but we can derive our power from the rule-based system – that is if America still cares about it. For example, the “North-South” conflicts over IP and investment remained a “politically charged” conflict during the period following the Uruguay Round, as developed countries had sought to secure commitments beyond that stipulated by the WTO; however, examining the conflict through the lens of International Political Economy, during the Uruguay Round and the post-Uruguay Round period, developing countries were blocking developed countries attempts to impose new international regulations, but the power derived from the “rules” of the institution and not the “resources” helped developing countries to prevail in both instances.
There is also an opportunity for a rethinking of the Caribbean Basin Initiative that sought to diversify Caribbean economies by offering permanent “duty‐free” entry into the US market for a wide range of tangible goods – such as edible fruits and nuts, coffee, tea and spices, fish and shellfish, and tobacco. It is not clear to me whether Trump’s “Liberation Day” will result in the CBI-related eligible commodities will also be subjected to tariffs. To emphasize the importance of the CBI as it relates to trade between the US and the Caribbean, in 2022, CBI beneficiary countries amounted to $11.6 billion of U.S. imports, ranking 26th among U.S. import suppliers. An increase from the previous years. To put this into perspective, U.S. imports from CBI beneficiaries steadily grew from $5.1 billion in 2020 to $8.7 billion in 2021 and $11.6 billion in 2022, which represented an increase of 70.5% and 33.7%, respectively. This is largely attributed to economic recovery following the height of the COVID-19 pandemic. Additionally, U.S. imports under the CBI tariff preferences increased to $1.9 billion in 2022, from $1.4 billion in 2021 and $1.2 billion in 2020. The Caribbean Basin Economic Recovery Act (CBERA), which was implemented on January 1, 1984, has no set expiration date; however, the Caribbean Basin Trade Partnership Act (CBPTA) is scheduled to expire on September 30, 2030.
Caribbean leaders can seize this opportunity to offer a few amendments to the Caribbean Basin Initiative – such as an end to the unilateral nature, changes to the rules of origin, including some services (this will mostly benefit the Eastern Caribbean country’s economies), and CBI-related development aid. Though, I highly doubt the Trump administration will go for the latter suggestion. It is also time for Caribbean countries to seek more stable and beneficial markets. Over the coming days, weeks, months and perhaps for the rest of Trump’s term and even beyond, Caribbean leaders will have to engage more within the international political economy not only for their own countries’ economic survival but also for their own political future.
Contributor
Emanuel Quashie, Lecturer for International Relations in the Department of Government at the University of the West Indies, Mona. He is the author of the peer-reviewed journal article, Rethinking the Caribbean Basin Initiative: A case study of US foreign policy toward the Caribbean Rethinking the Caribbean Basin Initiative: A case study of US foreign policy toward the Caribbean – Quashie – 2023 – Latin American Policy – Wiley Online Library
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