Posted: Friday, May 2, 2025. 3:48 pm CST.
The views expressed in this article are those of the writer and not necessarily those of Breaking Belize News or the institution he serves.
By Dr. Philip Castillo, PhD in Development Studies, Former Assistant Professor, University of Belize: One of President Trump’s stated reasons for imposing tariffs was his assertion that America was being taken advantage of in global trade. Tariffs imposed on the goods exported from other countries to the USA would make those exports more expensive while simultaneously yielding revenue to the US treasury. The revenue seemed to be a secondary aim, though. The primary aim was seemingly to erect a protective shield behind which American manufacturing would experience a renaissance and companies would relocate back to the United States. Economic literature regards this as reshoring.
But a few weeks after the tariffs were introduced, we now know that those stated aims will not come to pass. Why? First, within a few days the president scaled back the tariffs that had been planned for most countries, citing what he describes as a 90-day pause. China was excluded; in fact, triple-digit tariffs were imposed on China. Then the President exempted smartphones and other electronic devices, even those from China. Shortly thereafter, the president referred to some of his exemptions as temporary and threatened to reimpose tariffs on computer-related components.
For businesses, notably manufacturing enterprises, reshoring is a long-term, expensive decision, moreso when tariff policies are volatile and applied and removed seemingly at the President’s discretion. And when those policies appear not to have any coherence and violate broad economic consensus, then the best strategy is to sit and wait. To the extent that is being done, there are also economic implications since businesses price uncertainty into their decision-making processes.
By raising some tariffs on China and China almost immediately retaliating, there is now a full-blown trade war between two of the world’s largest economies. Both countries have direct trading relations with Belize, so the issue ought not to be if we will be affected or when we will be affected, BUT what can we do now to mitigate those effects.
According to SIB data, our exports to the USA are sugar, seafoods (conch and lobster mostly), molasses, sauces, and condiments. These are elastic…meaning that if prices rise due to tariffs, Americans will likely buy less or shift to cheaper substitutes. Arguably, the likelihood that our exports are elastic also brings about the possibility that the Belizean exporter may be asked to bear the full brunt of these tariffs.
On the other hand, many of our imports from the USA, such as gasoline, diesel, aviation fuel and propane are inelastic…meaning when the prices rise, we have little choice but to keep on buying. We need those imports. Other things being equal, if we export less to the USA and pay more for our imports from that country, expect the existing visible trade imbalance we have with the USA to widen.
Now focus on China. We hardly export to China, but more importantly, to the extent that vessels that bring imports to Belize are Chinese operated and in transit through American ports, they may end up attracting new port fees from the USA. From the import perspective, China is our second largest trading partner. Among our imports from China are substantial quantities of ramen noodles. Regarded as a staple for poor families, ramen is an unhealthy inferior good that will confine those same poor families to a lifetime of lifestyle and diet-related ailments.
But there is an opportunity in every crisis, and herein lies an opportunity. Long before the trade war erupted, the Public Sector Workers Trust (PSWT), in its ongoing efforts to empower its beneficiaries, initiated a Livelihood Sustainability Project. The PSWT partnered with GOB’s Ministry of Agriculture to provide seedlings, soils, and planting paraphernalia free of cost to interested beneficiaries. These beneficiaries are now growing at least six different short-term vegetables either for personal consumption or for sale. Suppose the Government, through its same Ministry of Agriculture, broadens this initiative to a national level. There are agricultural stations and field officers in every district who can provide seeds to whoever wants and encourage the planting of three-month crops.
If this is done, here is what I do know. In the next three months, the many Belizeans who take up the Government’s offer to plant vegetables will have those vegetables ready for harvesting. Eating your own home-grown vegetables will save family budgets and be a buffer against the price rises that are inevitably coming. Growing your own food will have other spinoff benefits, such as a healthier population.
Here is what I also know. President Trump has substantial latitude over his country’s tariff policy and has paused the tariffs on most countries for ninety days…that’s also three months.
What happens with the tariffs after three months? I don’t know. And given the incoherence of his erratic tariff policy, neither does he.
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The post The Trump Tariff Trade War – An Opportunity for Belize appeared first on Belize News and Opinion on www.breakingbelizenews.com.
Posted: Friday, May 2, 2025. 3:48 pm CST. The views expressed in this article are those of the writer and not necessarily those of Breaking Belize
The post The Trump Tariff Trade War – An Opportunity for Belize appeared first on Belize News and Opinion on www.breakingbelizenews.com.
