As many of you know, one week ago, the United States announced new tariffs, marking a major shift in US trade policy.
I want to emphasize that The Bahamas has had a friendly and productive relationship with the United States for many decades. Trade, tourism, investments, cultural exchanges – these are all important aspects of our longstanding relations with our closest neighbor. This is a mutually beneficial relationship, one which will endure.
But it’s important to be straightforward with you about how the new tariffs will affect us. The changes – and the turbulence in global markets which has followed – mean we are now facing new and very significant challenges.
I have been talking to leaders of other countries, reaching out to executives in our business community, and consulting with economists and trade experts to assess the likely impact and to plan for multiple scenarios.
A new ten percent base rate tariff for goods imported into the United States now applies to more than 100 countries, including ours. Other countries are also subject to additional or higher tariffs.
If the 10% tariff on Bahamian goods imported into the United States remains, Bahamian exporters in multiple industries will soon feel the impact. We have been in contact with US officials regarding the change in policy, and we are working with fellow Caribbean countries on collective diplomatic efforts.
We are also speaking with Bahamian exporters and working to understand whether there are short-term policies we could enact to cushion the fallout.
My government has taken trade diversification seriously from the start – which means that for the first time, our country has in place an agency dedicated to expanding trading opportunities, and a national trade policy. Significant efforts to create new trade relationships were already underway, and those efforts will now be intensified.
The new tariffs are likely to cause new inflationary pressures, which would mean higher prices for Bahamian consumers. For a country like ours, higher prices will add to what is already an unbearably high cost of living. We are very concerned about the impact on Bahamian families.
One of the key drivers of high prices in The Bahamas, for both families and businesses, has been the cost of electricity, which is why we’ve worked hard to create our country’s first nationwide, comprehensive energy reforms. Much-needed and long overdue upgrades to the electricity grid are underway, and today, in fact, we are signing a number of additional agreements to power our islands with solar energy.
I won’t sugarcoat the dangers we are facing right now, due to escalating trade tensions around the world – but I am thankful we will face this new crisis with these crucial price-reducing energy reforms in motion.
In addition, the VAT reduction on all food sold in our markets is providing some relief.
We understand how hard it is to make ends meet and we will continue to look for opportunities to reduce the burdens of high prices.
We will also intensify and speed up our efforts to grow more of what we eat at home.
Another significant risk to The Bahamas is that a slowdown in the US economy will slow our tourism industry. We will be convening industry leaders as we evaluate options for mitigating the risks we face, if the new tariffs are not significantly unchanged as US policy evolves.
Earlier this week, the international credit agency Moody’s upgraded our country’s credit rating to positive, for the first time in nearly two decades. This was very welcome news – and a reflection of the hard work we’ve done together, to grow our economy, reduce our deficit, implement key fiscal reforms, and tackle rather than ignore our country’s longstanding electricity problems.
At the same time, Moody’s noted that our country remains vulnerable to external shocks – something that unfortunately every Bahamian understands well. I’ve worked hard to fight for fair climate finance because our country has lost billions in direct economic costs and in higher interest rates because of hurricanes – billions we could otherwise have invested in our people and country.
Today, we face new risks, amid enormous uncertainty. The US tariffs are the highest they’ve been in more than a century – and since then, of course, the world’s economies and supply chains have become intertwined in complex ways, making it difficult to predict with precision what happens next.
Brothers and sisters – we may be in unchartered territory, but we know how to survive storms. We have always found a way to create opportunities out of uncertainty; to forge clarity and purpose from chaos and confusion.
I have seen Bahamians show enormous strength and ingenuity, during the most difficult times.
Together, we can trust in God’s grace, and take comfort in knowing our fellow Bahamians are capable of great compassion and resilience.
As one nation, together, we will pursue a constructive path forward, as we seek blessings and prosperity, for all of our citizens, and for all of our neighbours, including our friends in the United States of America.