Raphael John-Lall
US President Donald Trump’s “aggressive” nationalist economic policies and a subsequent trade war between the US and China will negatively impact T&T and the rest of the Caribbean.
Professor of economics at the University of the West Indies (UWI) St Augustine, Roger Hosein expressed these views in an interview with the Business Guardian on March 18 on the impact of President Trump’s pro-tariff economic policies on the Caribbean and wider world.
He said the Caribbean is particularly vulnerable to global trade shifts, as the region depends on US and Chinese imports, foreign investment, and tourism.
Noting that the 2018 US-China trade war disrupted markets leading to lower capital inflows into the region, Hosein said similar effects are expected under the 2025 tariff regime, posing several risks:
1. Higher import costs—The Caribbean imports most of its goods from the U.S. and China. As tariffs drive up costs, consumers and businesses will face rising prices, reducing purchasing power;
2. Tourism industry impact—Slower economic growth in North America could reduce the number of visitors to Caribbean nations, affecting hotel revenues, employment, and overall economic activity;
3. Supply Chain Disruptions—Tariffs on food, fuel, and building materials could create shortages and inflationary pressures, particularly in small island economies with limited storage capacity and booming construction demand;
4. Exchange Rate and Investment Risks—A stronger US dollar due to protectionist policies could make Caribbean exports less competitive, worsening trade deficits. Additionally, reduced foreign direct investment (FDI) from the US could slow infrastructure development and economic expansion.
“Trump’s 2025 tariff policies represent one of the most aggressive shifts toward economic nationalism in modern US history. While the administration argues that these measures will strengthen domestic manufacturing and strategic independence, early evidence suggests that they will increase economic uncertainty, disrupt global trade, and harm US consumers,” he said.
Hosein added that for the Caribbean, the risks are particularly acute.
“Trade disruptions, investment slowdowns, and currency fluctuations could strain economic resilience, forcing regional governments to rethink their trade and economic policies. Strategies such as diversifying trade partnerships, enhancing local production, and strengthening regional economic cooperation will be crucial in mitigating the fallout.”
He also said ultimately, the return of aggressive tariff policies raises fundamental questions: Will protectionism deliver sustainable economic benefits, or will it lead to deeper global economic fragmentation?
“T&T, the Caribbean, like much of the world, remains on edge, watching how this trade war unfolds and preparing for its economic consequences.”
He pointed out that the global trade landscape is once again under significant strain as Trump, in his second term, enacts aggressive tariff policies aimed at reshaping global commerce under the banner of “America First.”
“This new wave of tariffs targets principal trading partners, including China, Canada, Europe and Mexico, triggering far-reaching economic consequences. While the policies echo historical protectionist strategies, their long-term effects remain uncertain, raising concerns about global trade stability, economic growth, and potential repercussions for smaller economies, including T&T and the Caribbean.”
Resurgence of protectionism
Hosein said Trump’s tariffs represent a revival of “neo-mercantilism,” a policy approach that prioritises national economic interests by restricting imports, encouraging domestic production, and reducing reliance on foreign economies.
“Historically, mercantilist policies dominated the economic strategies of 16th to 18th century European states, emphasising trade surpluses and state intervention. In the modern era, neo-mercantilism manifests as selective protectionism, government subsidies for key industries, and the strategic application of tariffs to maintain economic dominance.”
However, he qualified this statement by saying Trump’s approach deviates from historical applications of mercantilism.
“Unlike Friedrich List in The National System of Political Economy, who advocated for temporary protectionism to nurture domestic industries before liberalising trade, Trump’s tariff regime appears broad and indefinite. Rather than targeting infant industries, the policy primarily aims to preserve US global hegemony, particularly in manufacturing. The administration argues that these tariffs will correct trade imbalances and counter foreign industrial policies, but economists warn that they may ultimately weaken US competitiveness and disrupt global supply chains.”
Lessons from previous tariffs wars
Hosein is also reminding observers that the US has engaged in trade wars before, with mixed results.
“The Smoot-Hawley Tariff Act of 1930 sought to protect US farmers and manufacturers by raising tariffs on imported goods. Instead, it led to massive retaliatory tariffs and, in part, a 66 per cent decline in global trade, and deeper economic hardship during the Great Depression. More recently, Trump’s 2018-2020 trade war with China resulted in a significant increase in tariffs (from an average of 3.7 per cent to 25.8 percent on US imports and from 7.7 per cent to 20.8 per cent on Chinese imports).
He said the economic fallout included higher consumer prices, disrupted supply chains, and job losses in industries reliant on tariffed goods.
“Trump’s 2025 tariffs are even broader in scope, targetting Canada, Mexico, EU and China simultaneously. These measures introduce significant risks to North American supply chains, raise production costs, and hinder efforts to reduce US reliance on China, a key policy objective since 2015. By imposing tariffs on strategic imports from all major trade partners, Trump’s policies could, however, inflict unnecessary economic hardship on US businesses and consumers,” said Hosein.
Strategic dependence and economic risks
Hosein argued that of the key justifications for the tariffs is the need for the US to reduce its strategic dependence on foreign supply chains.
“Between 2015 and 2023, the US successfully decreased its reliance on China, reducing the share of imports from China from 17.7 per cent to 12.3 per cent. However, this shift relied on increasing trade with Canada and Mexico. By now targetting all three principal partners, Trump risks reversing these gains, leading to higher input costs and job losses in key sectors. The tariffs apply to critical commodities such as steel, aluminium, auto parts, and energy products. While the intent is to boost domestic production and reduce reliance on imports, the reality is that many US businesses depend on global supply chains. Increasing costs on imports could lead multinational corporations to shift production outside of North America, further harming US competitiveness.”
Market reactions and and economic forecasts
Hosein said the financial markets have responded negatively to Trump’s tariff policies.
“The S&P 500 and Nasdaq fell to their lowest levels since his re-election, while European markets dropped sharply due to fears of global trade disruptions. Investors remain wary of rising production costs, retaliatory tariffs, and broader inflationary pressures. Various economic forecasts suggest that the tariffs will cost between US$366 billion and US$1 trillion over the next decade. Households, particularly low-income consumers, will be hit hardest as imported goods become more expensive. The Congressional Budget Office (CBO) warns that these tariffs could reduce real output, slowing economic growth and potentially triggering a recession, if trade disruptions persist.”
