CAYMAN BRACES FOR LIKELY IMPACT OF GLOBAL TRADE WAR

Cayman and the rest of the world are scrambling to come to terms with the implications of US President Donald Trump’s global reciprocal tariffs.

Promoted by Mr Trump as a move to ‘make America wealthy again’, the tariffs are meant to rebalance global trade in America’s favour following accusations by the US president that the US has been “looted, pillaged and raped” by its trading partners.

Cayman, like the UK, has been hit with a 10% reciprocal tariff - meaning the same level for importing from and exporting to the United States.

However, as most of Cayman’s imports come from the United States, that gives the US a significant trade advantage, especially the value surplus for food, cars, construction and household items including clothing.

According to the Cayman Islands Economic and Statistics Office(ESO), Cayman’s exports for 2023 were valued at $37 million which dwarfs in comparison to imports of around $1.2 billion - mainly from the United States - a huge trade deficit.

Beyond the direct tariff on goods from the US, an additional cost will be on shipping due to the Trump administration’s targeting of Chinese shipping with a whopping 25 per cent punitive tariff on Chinese-built ships vessels which could mean a total US tariff of as much as 35 per cent in some cases plus additional CIF)(Cost, Insurance, and Freight) costs.

The business, social and broader economic implications, notably for food prices, have also filtered into the ongoing political campaign for the April 30th general election. Candidates across the board have been pledging to explore other sources for food imports from producers in places such as the Caribbean, Central and South America to reduce the reliance on the US.

The calculation is that this would reduce the food import bill and have a major dent in lowering the cost of living. Even before President Trump’s bombshell tariff announcement, reducing Cayman’s food import bill by looking to suppliers other than the United States was already under consideration in political and business circles.

In the interim, however, Cayman is bracing for the inflationary impact of the 10 per cent tariff. The immediate knock-on effect will be noticed in food prices of American imports, with other products expected to be affected.

At the same time, how this could potentially impact Cayman’s key import-dependent economic pillars of tourism and financial services is also being assessed.

With the election campaign now at a fever pitch, and this issue being central to the global and local discourse, it’s anticipated that candidates and parties will be scrambling to formulate policy proposals to cushion Cayman from the worst of the potential fallout.