The Impending Trade War and its Possible Effects on Belize  

On Tuesday, we told you about the sweeping tariffs enacted by President Donald Trump on goods coming into the United States from Canada and Mexico and an increase on previous duties levied on China. The twenty-five percent tariffs were followed by prompt retaliation from the neighboring countries and China. The impending trade war may have detrimental impacts on smaller countries that depend on the United States for goods. In tonight’s edition of the Five-Point-Breakdown, we take a closer look at what led to the implementation of these tariffs and what possible impacts they may have on Belize. Here’s News Five’s Britney Gordon with that story.

 

Britney Gordon, Reporting

Countries around the world are bracing for what many call an international trade war. A trade war is an economic conflict between countries that typically arises when one retaliates against unfair trading methods. On March fourth, President Donald Trump imposed a twenty-five percent tax on goods from Canada and Mexico, and an extra ten percent tax on Chinese goods, these taxes are otherwise known as tariffs, and their implementation has resulted in international uproar and unease as countries formulate a response plan. But why did President Trump impose these tariffs? He says it’s to pressure governments to crack down on the illegal trade of fentanyl, a drug that kills tens of thousands of Americans each year.

 

Trump Imposes Heavy Tariffs on Trade Partners

 

Donald Trump, President, U.S.A.

“Just so you understand, vast amounts of fentanyl have poured into our country from Mexico. And as you know, also from China where it goes to Mexico and also Canada. No room left for Mexico not for Canada. The tariffs, they’re all set. They go into effect tomorrow.”

 

In response to these tariffs, Canada, Mexico, and China quickly hit back with strong tariff packages on U.S. goods. Both Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum have labeled Trump’s actions as “unjustifiable” and see them as the first step towards a trade war.

Canada, Mexico & China React to US Tariffs

 

Claudia Sheinbaum, Mexican President

“It is by no means our purpose to start an economic or trade confrontation, which is unfortunately and regrettably, is the opposite of what we should be doing. That is integrating our economies more to strengthen our region.”

 

While Sheinbaum voiced her disappointment in Trump’s actions, Trudeau announced plans to retaliate. He argued that the tariffs are unnecessary since less than one percent of fentanyl entering the U.S. comes from Canada.

 

Justin Trudeau, Canadian Prime Minister 

“Canada will be implementing twenty-five percent tariffs against a hundred and fifteen billion dollars’ worth of American goods.”

 

Trump has also threatened to impose similar tariffs on European countries. These tariffs are not just about curbing illicit drug trade. The Trump administration also wants to boost the economy by bringing manufacturing back to America. However, this move could hurt the economy in the short term, with rising costs of goods and falling stocks on the global market. Prime Minister John Briceno says Belize plans to strengthen its resilience as North America deals with the fallout.

 

How Will Belize Avoid the Fallout of a Trade War?

 

Prime Minister John Briceño

“What we have to do is then to try to see that maybe start to look at other areas to import from. Most of imports come from the United States. And what  I’m sure that Mr. Trump understands is that when he raised tariffs, the tariffs is not the country that’s selling the product pays it. It falls on the consumer. On their consumers so that the prices of imports from China into the United States will probably go up.  So that maybe we need to look at maybe import from Mexico or other countries or even Canada as opposed to from the United States. Right? But that’s not a decision that we will make as a government. The private sector, they’re nimble. They’re going to refining and scouting out where they could get things that are going to be cheaper.”

 

Briceño says Belize will do its best to stay out of the line of fire. However, economist Dr. Leroy Almendarez points out that Belize needs to consider the bigger picture. He explains that smaller countries relying on American imports might not have enough time to adjust to the price spikes, which will affect various industries.

 

Possible Impacts of a Trade War on Belize

 

Dr. Leroy Almendarez, Economist

“The impact is far reaching. I mean, when you really, I looked at and I just look at just quickly at 2022, we imported over six hundred million. We exported about eighty-six million. So, what’s the what’s the trade inbalance that exists there? It simply tells you that we are very import dependent and in agriculture, let’s take agriculture. We might have final products but what about the inputs? If we import inputs like fertilizer, whatever it is from the United States, and those prices are marked up, then what happens to our agricultural products? The cost of production will go up. The cost of consumption in Belize will also go up if it’s for domestic consumption, if people really consume it locally.  But what about exporting it? It drives up the cost of production, which simply means now it will cost you more to produce a unit of a product, so you’ll produce less.”

 

Almendarez suggests boosting Belize’s manufacturing capabilities and diversifying trade relations with Central America and CARICOM to counter the tariff impacts. We also ran a non-scientific poll on social media to see how Belizeans feel the impending trade war will affect the country.

 

Are Belizeans Concerned About an Impending Trade War?

 

The majority of participants— forty-nine percent of the one thousand, thirty-nine voters, expect a strong negative impact, while thirty-one percent foresee a disastrous outcome. They predict higher prices for goods, suffering exports, and struggling trade-dependent industries. Eight percent think the outcome will be somewhat bad, seven percent believe it won’t be bad at all, and five percent are optimistic, suggesting the tariffs might open up more trade opportunities between the U.S. and Belize. Britney Gordon for News Five.