American President Trump imposed (38%) tariff on imports from Guyana. It will have a significant impact on sales of Guyanese products exported to USA, and by extension the Guyanese economy, including GDP, foreign exchange, and jobs, among other aspects. One way to address tariff is to engage America to address reasons for the tariff. Another solution is to enter into a treaty with USA that would eliminate the tariff.
A tariff is a kind of a sanction against Guyana for ‘unfair trading’ practices, as defined by the President. Tariffs create uncertainty in the market and by extension in the economy. There is a ripple effect on the economy in the import as well as exporting country.
Tariff is a tax on imports that result in higher prices – done as a form of trade retaliation to bring about equal trade terms; to discourage imports; to raise revenues especially for poor countries; to protect local industries from foreign competition; to redistribute money from consumers towards local producers; among other reasons. Tariff is generally borne by consumers in the importing country rather than importers (wholesalers and retailers) or the producers of the exporting country. The tariff, according to various studies, is generally passed on to consumers. That is one way of having rising prices.
American total imports from Guyana are negligible (leaving out oil which has not been tariffed) in terms of overall American imports, with a few items valued at a few million dollars, and, therefore, tariffs would have almost nil effect on USA (among American consumers most of who are Guyanese Americans) but major effect on Guyana in terms of exports and the overall economy. Tariffs generally result in higher prices of goods, and as such, will likely result in reduced American purchase (and by extension lower imports) which will significantly impact Guyana. Businesses will earn less revenues, negatively impacting government taxes, and jobs would be on the line. American businesses that import from Guyana will also be affected – tariff may lead to less American imports, less revenues, less taxes for the treasury, and probably loss of jobs. World trade data suggests that Guyanese exports to USA account for some 23% of Guyana’s GDP (unclear if oil is included). Guyana has the largest export and import in dollar value to/from America. Guyanese imports from USA will not be affected because Guyana has not retaliated with higher tariffs. And with the economy rapidly growing, imports will increase for industries and consumption. GDP will be affected by lower exports but balanced off with increased imports.
At any rate, although our exports are small for USA economy, overall American tariff would significantly affect the Guyanese economy. With American imports from Guyana so small, and depending on the products imported, the President Trump tariff itself may not affect American demand for Guyanese goods, and as such Guyana could escape with little fall out in exports and imperceptible effect on GDP. But small changes can disrupt our economy.
Guyana can’t afford to ignore the Trump tariff. Guyana is worse off with tariffs as they reduce demand for foreign goods. That can create political challenges for our country and make it difficult to build on friendly relations with America. Guyana should try to find a way to address the tariff issue through negotiation and treaty with USA. If Guyana were to become an American territory, there would be no tariffs on Guyanese goods. And there would be no need for a visa to come to USA.
One suggestion offered by a group of Guyanese Americans to address tariffs is for a friendship treaty with USA or a linkage (to be negotiated) with America that automatically deter any kind of tariffs by Guyana on American products and vice versa. (Such a treaty could lead to American protection of Guyana from Venezuelan threats). When tariffs are removed from American imports in Guyana, goods are cheaper; people can afford to have a better lifestyle with the same amount of money they currently earn. So Guyana can also consider reducing tariffs on imports which would lead to an elimination or reduction of American tariffs.
