The latest flurry of tariffs imposed on Canada, Mexico and now the United Kingdom (UK) by the US continue to put the globe in a tailspin.
Between March 11-12, the tariff war continued to escalate as US president Donald Trump’s 25 per cent tariff on metals took effect.
The measure raises a flat duty on steel and aluminium entering the US and ends all country exemptions to the levies.
Some of the countries that were exempted included Canada, the UK and the European Union (EU).
The move prompted an immediate response from the EU, which promised counter tariffs of billions of Euros on US goods.
The latest exchange in the tariff world war sparked by the US government has already had a significant effect, with uncertainty shaking Wall Street.
But local economists speaking to Business Day said the effects could trickle down to the Caribbean and to TT, which is something of a net importer itself.
What are tariffs
and why is Trump using it?
Before we get into the effects of Trump’s tariffs, it is important to understand what tariffs are and how they work.
Tariffs are taxes charged on goods imported from other countries.
For example, if TT had a 20 per cent tariff on a particular US-made item costing US$10, when it is imported it will have an additional US$2 charge.
Businesses that import these items can decide whether to absorb the cost or pass some or all on to customers.
The US International Trade Administration in TT says customs duty is imposed on products coming into TT based on the fair market value of imported goods at the time it lands in the country.
Import prices for products are generally based on cost, insurance, freight and duty along with VAT, which is reduced to zero per cent for certain goods.
[caption id="attachment_1130203" align="alignnone" width="1024"] A cargo ship docked at the port of Port of Spain.TT, a net importer of goods, will have to adjust to the changing US trade policies. - File Photo[/caption]
TT has also implemented Caricom’s common external tariff (CET) for goods from countries outside Caricom, with import tariffs going as high as 30 per cent for auto parts, DVD players and jewellery, and 20 per cent for other products.
TT’s tariff system fits in seamlessly with its foreign trade policy which also has bilateral investment agreements with the US, Canada, China, several countries in the EU, the UK and Mexico.
TT also has a preferential tariff arrangement with the US under the Caribbean Basin Economic Recovery Act, implemented in 1984 to allow products from beneficiary countries such as TT to export to the US without having to pay any duties.
Economist Dr Marlene Attz explained tariffs are one way to protect developing industries in any country, including the US.
"That is normally the economic argument for the implementation of tariffs, because you want to protect some fledgling industry and you want to nurture that industry."
These tariffs implemented by the Trump administration are a central part of his economic plans.
During his campaign trail
