President Donald Trump delivered on a promise today by announcing tarifs on the world. The objective he believes, to boost domestic production and in the process Make America Great Again (MAGA).
Time will tell very soon if Trumps strategy of using tariffs and executive orders will achieve the objective. What all the market analysts have suggested is that it is too simplistic an approach. Although the stock market is not an economic indicator, it has been reported 4 trillion has been wiped from the US stock market since Trump’s reelection.
The blogmaster is of the certain view the disruption to the global economy caused by Trump policies will force countries to renegotiate different ways to do business. Trump’s isolations strategy will be challenged given that there are alternatives IF countries commit to forging new strategic relationships.
Of immediate concern is how will Trump policies affect Barbados and the Caribbean. At first read there is a 10% baseline tariff that was imposed on ALL imports to the USA. Although Barbados is not a significant exporter of goods compared to the major players, we have exports like rum, sugar products etc that will be impacted.
Then there is tourism revenue on which Barbados and many Caribbean islands are over reliant. If the price of commodities increase significantly in the USA and Canada which are key source markets, it will reduce disposable income for North Americans. The obvious impact is that many will decide to revisit travel plans to countries like the Caribbean.
The government of Barbados has been nurturing relationships with non traditional partners to mitigate against fallout such as we been witnessing with the reelection of Trump. Our economy is already very fragile made worse by mismanagement by successive DLP and BLP governments. We should also be worried about the fact our economy is wedded to the US economy because of the peg to the dollar.
After years of growing a global economy on the concept of ‘globalisation’ and free trade, we are witnessing a US President deciding to pivot to implementing isolationist economic policies.
The blogmaster invites you to join the discussion.