By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Prime Minister last night said he “won’t sugarcoat the dangers we are facing” from increased “inflationary pressures”, a tourism and economic contraction, and reduced exports as a result of US tariff policies.

Philip Davis KC, acknowledging the peril The Bahamas faces due to its vulnerability to external shocks, conceded that the country is exposed to “new and very significant challenges” as a result of the global uncertainty and stock market turmoil unleashed by Donald Trump’s move to completely shred long-standing international and commerce norms.

While the upheaval seemingly forced the US president to pause the imposition of tariffs on most countries, China excepted, for a period of 90 days until early July, Mr Davis said the Government has already reached out to US officials over the negative impact for the Bahamian economy and is seeking to develop a unified Caribbean lobby against these measures with regional counterparts.

Mr Trump yesterday said most nations will face a 10 percent tariff on their exports to the US until July. This makes zero difference for Bahamian exporters, such as Morton Salt, Polymers International and the crawfish industry, given that 10 percent was the rate initially imposed on this nation, and Mr Davis last night said the Government is examining ways “to cushion the fall-out” for such companies.

He also suggested that the Government’s energy reforms, which are designed to make electricity more affordable for both Bahamian households and businesses, and increase the country’s economic competitiveness, plus the just-implemented 50 percent VAT rate cut on all unprepared food to 5 percent, could not have been better timed and may help to ease “unbearably high” cost of living pressures.

“A new 10 percent base rate tariff for goods imported into the US now applies to more than 100 countries, including ours. Other countries are also subject to additional or higher tariffs,” the Prime Minister said in a statement.

“If the 10 percent tariff on Bahamian goods imported into the US 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,” he added.

“Significant efforts to create new trade relationships were already underway, and those efforts will now be intensified.” Turning to other negative effects from the US tariff policy, Mr Davis added: “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,” the Prime Minister said.

“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.”

Mr Davis also acknowledged that “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....

“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,” the Prime Minister added.

“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.

“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.”