Over the past two weeks global news has been dominated by international trade and the impact of tariffs introduced (and then partially removed) by the United States of America. Businesses and government have been scrambling to understand the implications of the tariffs and how to respond. Imports into the USA from most countries in the world, including Trinidad & Tobago, are now subject to a new 10% tariff with some exceptions.
The US export market is very important to Trinidad & Tobago, accounting for about 30% of T&T’s exports. Over 95% of T&T’s exports to the USA are comprised of just a handful of energy-related commodities: crude oil, LNG, methanol, ammonia, fertilizers (urea and UAN) and iron & steel. Crude oil and LNG and some fertilizer imports are exempt from the tariffs, but the other commodities are subject to the 10% tariff and in some cases higher commodity-specific tariffs.
While the 10% tariff is applied across the board and paid by the importer, there may still be some implications for T&T exporters. Domestic producers in the US obviously are not subject to the tariffs, while there may also be imports from certain countries that are also exempt. This could include Mexico and Canada, with tariffs on some imports operating under the United States–Mexico–Canada Agreement (USMCA), and potentially Russia (where no tariffs have been listed). The case of Russia may be significant for Trinidad, because they are a major exporter of ammonia.
This could mean that Trinidad-produced commodities are less competitive in the US market. When Point Lisas was originally established and expanded, Trinidad was considered a low-cost producer based primarily on affordable natural gas. This is no longer the case, due to both higher domestic gas prices and the fact that plants are running below capacity. This means that there is a danger that Trinidad exporters could be squeezed out of the market once additional tariffs are levied, if there are other sources without tariffs. Companies are carefully monitoring the situation.