The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Donald Trump’s proposed 10 percent tariffs could have a near-$50m impact on key Bahamian crawfish and salt exports to the US if they are fully enforced, the Inter-American Development Bank (IDB) has warned.

The multilateral lender, in its latest Caribbean quarterly economic bulletin that was released over the Christmas period, said The Bahamas’ exports of these two commodities to the US generated an annual average value of $52.7m between 2021 and 2023 - making them key sources of foreign currency for this nation.

Acknowledging that the Bahamian economy has so far displayed “resilience” to the shocks generated by the US president’s trade and tariff policies, the latter involving new and increased taxes being imposed on all imports, the IDB said the effect on this nation’s main industry - tourism - from the resulting uncertainty and increased American consumer costs has so far been less than expected.

“The Bahamian economy has so far shown resilience to tariff hikes by the US. This is largely attributable to transitory factors such as the front-loading of trade and investment strategies coupled with inventory management,” the IDB said referring to an International Monetary Fund (IMF) study.

“Still, the main channels through which US trade policies could impact The Bahamas are the possibility of a US or global recession or sharp deceleration, which could reduce tourist visits to The Bahamas, and higher inflation expectations in the US which could contribute to worsening consumer confidence.

“If inflation does rise, it could pass through to higher import prices in The Bahamas and, through a reduction in US consumer purchasing power, reduce travel to The Bahamas.” This nation, as an import-dependent country that brings in virtually all it consumes, is especially vulnerable to Mr Trump’s tariff policies - a situation that is made worse by the fact The Bahamas sourced an average of more than 80 percent of its imports from the US between 2019 and 2023.

However, the IDB added: “The expected ‘tariff shock’ has been smaller than what had been anticipated, particularly on tourism. From January to September 2025, total visitor arrivals for The Bahamas reached 9.1m - an 8.7 percent year-over-year increase - aligning with authorities’ expectations that 2025 is going to be another record year.

“However, the cruise sector is expected to be the main driver of this surge while the more lucrative stopover segment has experienced a slight contraction, with year-to-date air arrivals for 2025 falling by almost 2 percent year-over-year. Some attribute this decline to a drop in US consumer confidence, which indirectly affects tourist flows.

“To circumvent these global trends, the Ministry of Tourism is pivoting to diversify its source markets, including capitalising on a 75 percent surge in Canadian arrivals by adding 27 new flights and executing targeted marketing missions to the mid-west in the US and to Europe.”

Turning to The Bahamas’ physical goods exports to the US, the IDB report added: “The potential impacts from the tariff shock could be felt in the crustacean and salt industries. The main exported goods from The Bahamas are crustaceans (mainly lobster) and salt.

“From 2021 to 2023, the average annual goods export value of these commodities to the US reached US$52.7m, representing 16 percent of average annual total national goods export value, and 52 percent of the average annual total exports of these products - although only 25 percent of average annual total exports to the US.

“These goods are important not only in the Bahamian export basket, but also an important share of exports to the US. It is estimated that if a US 10 percent tariff is properly enforced, and with a full pass-through, it will have an impact of between $15.9m and $49.2m, equivalent to 5 percent and 16 percent, respectively, of the average annual total export value to the US over the last three years.”

While efforts to diversify import sources, and access new markets, are still in their infancy, the IDB said they have the potential to mitigate some of the fall-out from Mr Trump’s tariffs. “The Bahamian government had already launched a trade diversification programme to reduce reliance on US imports amid concerns of the rising cost of living,” the IDB report added.

“Elevated prices partly stem from duties on re-imported goods, but recent efforts are yielding results as food importers source breadbasket items from Latin America. This early implementation of an import diversification strategy prior to the introduction of new US tariff policies positions The Bahamas to mitigate potential adverse impacts on trade and economic stability.

“Regarding policy responses, the Government has adopted a cautious ‘wait and see’ approach, understanding that uncertainty in US policy and potential impacts via higher global prices could reduce tourism if economic growth decelerates in the US. The diversification programme continues to be a key strategy, and relies on the Caribbean Community (CARICOM) co-ordinating trade negotiations with the US.”

Further noting The Bahamas’ dependence on the US, the report added: “The US remains The Bahamas’ main trading partner, accounting for over 60 percent of total trade flows from The Bahamas’ main partners and over 90 percent of total exports in 2024.

“In the first quarter of 2025, the US accounted for nearly 77 percent of non-oil exports of goods and services, though mostly services. The Bahamas is also highly dependent on the US with 84 percent of non-oil imports originating in the US. Higher prices of imports could reduce affordability for Bahamians. Still, goods imports decreased from January to July 2025, with imports from the European Union (EU) and from the US falling 21 and 10 percent, respectively.”

And, turning to price pressures, the IDB said: “Inflation in The Bahamas remains nearly flat, despite pressures on housing and utilities’ prices with the annual rate around 0.4 percent in May 2025. This stability, however, masks divergent trends.

“A deceleration trend is driven by lower and more stable global fuel prices, which have curbed costs in both tradable and non-tradable categories. Offsetting these trends are housing and utility price increases due to both rate adjustments and seasonal summer demand.

“This suggests that the pass-through from international price increases is limited so far. Consequently, annual inflation is projected to remain below 1 percent in 2025 and 2026, only gradually converging toward its long-term equilibrium of 2 percent by 2029.”