Jamaica PM Andrew Holness-led administration is pushing local firms to explore new markets in the wake of the Trump administration’s imposition of a 10% tax on Jamaican exports to the United States, even as it seeks “urgent clarification.”
The tax will take effect on April 4, 2024. Holness, addressing the EXPO Jamaica’s opening ceremony at the National Indoor Sports Centre on Thursday, stated that approximately 90% of Jamaican exports to the United States are on advantageous terms.
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While formal details about the new tariff’s application, particularly its impact on Caribbean Basin Initiative requirements, are unknown, the government actively engages with US trade representatives “to seek urgent clarification.” This follows US Secretary of State Marco Rubio’s recent Caribbean trip. Holness noted that his administration is undertaking a technical review to determine the scope of the levy and its consequences for Jamaican trade and industrial policy.
Holness noted, “It is important to emphasize 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.”
He further explained, “Still, we will use every available diplomatic channel, including working with our CARICOM brothers and sisters and utilizing 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.”
Some of Jamaica’s major exports may be free from the new tax, according to preliminary research, and the government is trying to confirm and perhaps increase these exclusions. Holness promoted a proactive and forward-thinking strategy, stressing the significance of seeing possibilities within the tariff obstacles.
“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,” he stated.
He continued, “The Government will continue to advocate on your behalf and ensure that your interests are protected in any new global-trade architecture.”
The administration began preparing long ago, according to Holness, who claimed the government was aware that the levy may have long-term effects.
“… 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 the 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 noted.
Economist Keenan Falconer has concluded that the 10% import taxes imposed on Jamaican exports will make it more costly for US importers to import Jamaican goods into their nation.
According to him, in this case, Jamaican exporters might choose to cut prices or export quantities to be competitive in the US market. However, he stated that the anticipated decline in export earnings can be lessened based on how elastic the exported goods are.
According to Falconer, the American market for food and beverage exports consists of many diasporic Jamaicans who are prepared to buy products for reasons other than price, such as cultural and quality concerns or the absence of appropriate alternatives.
Falconer explained, “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.”
He further noted, “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.”
