Mon | Jul 16, 2018

Letter of the Day | Jamaica's glimmer of optimism amid Trump's tariff hikes

Published:Monday | March 12, 2018 | 12:00 AM

THE EDITOR, Sir:

I have been reading the articles and comments on the likely impact of the tariffs imposed on aluminium (10 per cent) and steel (25 per cent) by United States President Donald Trump.

My research indicates that there may not be an immediate, short-term impact on Jamaica's exports of alumina, which is the primary input to aluminium. The main foreign investors in Jamaica's bauxite and alumina industry are from Russia, China and the USA. Jamaica now mainly supplies alumina to Russia, the USA, China, European Union and Canada. The major producers of bauxite and alumina are now Australia, Brazil, Guinea, India, China and Jamaica.

 

STRONG DEMAND FOR ALUMINIUM

 

Jamaica's alumina production could be affected if there were to be a drastic reduction in aluminium production, which would lead to a contraction in the demand for alumina in the markets which it supplies. It would appear that there is still a strong demand for aluminium worldwide, including in China, and that new markets could be found to supplement any loss of share in the US market.

However, the forecast from Russia seems more gloomy. From reports, some alumina producers elsewhere are actually viewing the US tariff as a potential opportunity to sell more alumina to the USA. Where Jamaica could be affected more readily is if the US' 10 per cent tariff on imported aluminium leads to an increase in the price of aluminium products that Jamaica imports from the USA.

 

STEEL IMPORTATION

 

Regarding steel, Jamaica mainly imports steel from Brazil, China, India, South Korea, USA and the EU. Jamaica would be impacted if the US' 25 per cent tariff on imported steel leads to an increase in the price of steel products imported from the USA. As with aluminium, it could lead Jamaica to source supplies from other countries, which would also be seeking new markets.

The general concern for Jamaica at this point, as I see it, would be if the US tariff increases lead to retaliation by US trading partners, imposing tariffs on imports from the USA, resulting in a trade war and general instability in world trade.

The heads of the World Trade Organization and the UN Conference on Trade and Development have cautioned that a trade war would be in no one's interest and vulnerable developing countries would be casualties. Trade, especially increasing exports, is essential to Jamaica achieving sustained growth.

ELIZABETH MORGAN