Guyana's Tariff Tango: Caught Between US-China Rivalry

In a recent turn of events, Guyana, the Caribbean nation, has been granted a brief 90-day reprieve on higher tariffs from the United States, significantly lowering previously proposed rates from 38% to 10%. This relief arises amid growing tensions between the US and China, with Guyana inadvertently caught in the crossfire of a geopolitical chess game. Political commentator Francis Bailey articulates that the high tariffs were a tactical move by the US, aimed at pressuring Guyana to diminish its burgeoning ties with China, which has invested billions in infrastructure projects across the country.

In recent years, Chinese investments have poured into Guyana, constructing vital infrastructures such as roads and hospitals—an initiative marked by the construction of a crucial bridge by a Beijing-based company. While the US imports significant exports from Guyana, including crude oil, gold, and bauxite (exempt from the new tariffs), activities affecting the fishing and sugar industries were targeted by the proposed tariffs, highlighting the strategic economic leverage employed by the US.

Guyanese officials did not respond to media inquiries, yet the nation, previously one of the poorest in the western hemisphere, has seen a wealth surge since the discovery of oil in 2015—exporting $3.13 billion of crude oil to the US in the past year alone. The 10% tariff is now universally applied across Caribbean nations, though the repercussions for local economies could be staggering. Many Caribbean countries rely on US-imported goods for up to 70% of their consumer items, and rising tariffs will undoubtedly inflate prices.

For example, in Antigua and Barbuda, a designer expressed worries about material shortages and rising costs affecting her business. Responses from local governments suggest that strategies to mitigate these pressures include lowering import duties and enhancing local production of essential goods.

Given the backdrop of economic challenges stemming from natural disasters and the Covid-19 pandemic, the Caribbean region finds itself in precarious circumstances. Sir Ronald Sanders, Antigua and Barbuda’s ambassador to the US, noted that the region has been overly dependent on the US market, highlighting the urgency for diversification into new trade partners.

As Caribbean leaders strategize to address the fallout from such tariffs, Mia Mottley, chair of the Caricom intergovernmental group, stresses the need for unity in overcoming these economic hurdles, stating that the Caribbean must not rely solely on one or two markets. The looming threat of increased freight costs associated with tariffs on Chinese-built ships entering US ports exacerbates these worries, reflecting the intricate interconnectedness of global trade in this geopolitical clash.