The increased US tariff rate of 15% took effect on our economy from August 7th.
The impact of this amended charge will affect all sectors of the economy.
Economist Dr. Vaalmikki Arjoon says a large impact will be felt in the foreign exchange market – as prices in the US increase because of these very tariffs, we can expect a decrease in the ease of business.
“That would mean that given the tight foreign exchange supply, the tight foreign exchange market in the banking system that we have been faced with for several years, it means that we could find several businesses having no choice but to increase the amount that they purchase in the black market. And if the demand for black market foreign exchange to be able to afford these more expensive items in the United States goes up, then it means that the black market rate in itself could possibly increase because when the demand for black market forex increases, the black market suppliers could very well push up the price.”
Dr. Arjoon says there are several solutions to the problem, including negotiations for tariff reductions. He says Prime Minister Kamla Persad-Bissessar has assured a team is looking at the situation closely.
“Aim to secure tariff reductions, a reduction in this 15%, especially as it pertains to export commodities, our main export to them, which is the energy commodities, also chemicals, manufactured products, processed foods, for example, that we would export to them also. We have to get them halfway by some kind of offering reciprocal preferential market access to US products, particularly by lowering the import duties that we levy on US imports.”
Dr. Arjoon says another big solution lies in diversifying our trade relations and increasing market share with the rest of the world.