WESTERN BUREAU:
With the 10 per cent baseline tariff announced on April 2 and imposed by the United States (US) on countries with which it trades, local agricultural exporters and other stakeholders are expressing ongoing concern over the potential consequences on their businesses and the Jamaican economy.
Earlier this month, US President Donald Trump placed what he labelled “reciprocal tariffs” on imports into that country, but, subsequently, announced a three-month pause on their implementation for several nations that were hit with varying rates above the baseline.
The 10 per cent tariff, however, went into effect across the board on April 5 and Jamaican Prime Minister Dr Andrew Holness said the Government was actively engaged in discussions with the US on the matter.
But almost a month later, local exporters remain uneasy.
Jamaica’s main agricultural export is yam, which raked in US$40.8 million, or nearly J$6.7 billion, in 2023, according to the Economic and Social Survey Jamaica published last year. Those earnings were up 16.5 per cent from 2022, and the figure saw a further increase to US$43 million in 2024, according to Agriculture Minister Floyd Green.
However, yams are not the only agricultural products sent to the US. Other products, such as bananas, peppers, thyme, and coffee, are also provided to the northern market.
Rita Hilton, CEO of Carita Jamaica Limited, which supplies Scotch bonnet pepper and thyme to the US, indicated that she has already begun to work on mitigating the potential consequences of the tariff. According to Hilton, an agreement between her business and its main buyer will assist in easing the burden of the 10 per cent tax that has been assigned to her products.
She told The Gleaner, though, that consumers might still be impacted once the products land on US soil.
“We negotiated that we will split the tariff. They (the buyer) will absorb five per cent, and I will do the same. I can manage that, but I don’t know if other exporters can,” Hilton said. “But in the end, the customer is going to have to suffer because the prices will be raised for the US customer. I think this tariff will have some repercussions, depending on how many levels the produce goes through before it reaches the final consumer.”
Manufacturing economy
At the same time, Hilton noted that the tariff might have a greater impact on the manufacturing economy, as Jamaica imports a large portion of its raw materials before exporting finished goods to the US.
“We bring in all of our packaging for our food items – the plastic bags, bottles, caps for the drinks, and even labels. If they are coming from Europe via the States, there is going to be a huge fallout for the local people. Trump has put in a 25 per cent tariff on Europe [that is slated to take effect at the end of the pause], and even more on some [other] places. The [Jamaican] exporter will have to recover that spending so, in the end, the end users are going to have a problem,” said Hilton.
“Say, for instance, you are processing ackee and your tin cans are coming from overseas; you are going to pay some sort of tariff if those tins didn’t come directly from the States. Those implications we haven’t been able to see as yet, but it is much more complex. It is not so complex for the shippers of fresh produce, because the 10 per cent you can accommodate one way or the other, but a lot of the stuff in the process of manufacturing is imported,” she added.
Trevaun Welcome, export director at Capsicum Exports Limited, told The Gleaner that while agricultural products will see price increases, it will not “be detrimental to the Jamaican economy because the products that we sell to America will also have a tariff from [competing nations]”.
“People in the diaspora will still support local goods. You can’t jerk chicken without Scotch bonnet, and you can’t cook a Jamaican breakfast without yam and pumpkin, but it will make it more expensive,” he said.
Meanwhile, Lenworth Fulton, president of the Jamaica Agricultural Society (JAS), is expecting a major fallout based on the increased shipping rates for exports. Describing the tariffs as a “jigsaw puzzle”, Fulton stated that Jamaicans in the diaspora and local farmers might become victims of the taxes that will be imposed on the food items.
“Our products might face different competitive barriers. The Trump-imposed tariffs begin with 10 per cent, of which we are in that category, but our major agricultural partners in the Caribbean – Guyana, Suriname, Trinidad – have higher rates, but I do think it will affect us in some way or another. It will also affect us indirectly, because these tariffs will affect interest rates, so the whole financial system is like a jigsaw puzzle,” he said.
Glendon Harris, former president of the JAS and a former banana exporter, holds a similar view. He told The Gleaner that local farmers might be given the short end of the stick because exporters might want to purchase their products for a lower value to offset the costs.
“Naturally, the tariff will affect our farmers because [of] the price at which the produce will be sold for; and if there is any delay – most of those foods are perishable – they might spoil before they pay the tariff,” Harris said.
