By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian economist yesterday warned “there’s really no escape” for this nation with the global economy “on trajectory” for a recession due to the stock market and trade turmoil sparked by US policies

Rupert Pinder, assistant professor of economics at the University of The Bahamas (UoB), told Tribune Business that a global economic contraction is “a real possibility” due to the uncertainty caused by Donald Trump’s trade and tariff wars with this nation’s status as a small, open and import-dependent economy leaving it especially vulnerable to the fall-out.

Speaking amid rising concern over the up to $1m per port call fee that the US proposes to impose on Chinese-made ships, and the impact this could have on consumer prices, he added that the inflationary and cost pressures effect for The Bahamas “goes without saying”. 

But, with major US trading partners such as China and Canada already retaliating to Mr Trump’s tariffs with protectionist levies of their own, and others set to potentially follow, Mr Pinder told this newspaper that such actions - as well as reduced wealth from the resulting stock market turmoil and battered consumer confidence - meant fears of a global economic slowdown and contraction are justified.

“I think that, on the trajectory we are on, I think it’s a real possibility of a global recession,” he warned. “It’s a real possibility, and that’s an assumption based on the trajectory we are on. Tomorrow, we might wake up, things change and the markets will respond differently, but I think we are on pace. The countries who are major US trading partners are responding.

“For a smaller country like ours, we have no alternative. We cannot talk about alternative markets when everything is intertwined. Everything is connected, everything is connected. There’s really no escape. With this much uncertainty, if you are a business person right now faced with supply shocks, in terms of investing money you hold back in terms of investing and expansion.

“Given all this uncertainty on the global markets, this is not the conditions conducive to investment spending. There’s too much by way of uncertainty.” And, if companies pull back on expansion-related investment, job creation will also suffer

Meanwhile Rupert Roberts, Super Value’s owner, told Tribune Business that the proposed US fee on Chinese-made ships calling at US ports would result in “freight costs being higher than the actual cost of the goods” being shipped to The Bahamas and the Caribbean.

He disclosed that Tropical Shipping, one of the major freight carriers servicing The Bahamas, had interpreted the proposal from the US Trade Representative’s Office as meaning that up to a $1m fee could be levied on all Chinese-made ships every time they call at a US port. Most of the vessels servicing The Bahamas and the Caribbean in a freight capacity are made in China.

However, as reported by Tribune Business, the US National Law Review has reported that the fees would only apply to - and be determined - by the number of “proposed” new vessels that a non-Chinese carrier such as Tropical Shipping has on order or are being built at Chinese shipyards. This seemed to imply that existing Chinese-made vessels already operating may not be caught by the fee net.

Instead, the National Law Review said the proposed fee structure is a sliding scale based on how many “proposed” new-build vessels or orders a carrier has with China. 

The $1m per US port call fee will only be applied to carriers where 50 percent or more of their “prospective” Chinese ships will be delivered within the following 24 months. This fee drops to either $750,000 or $500,000 per call if the percentage is less. There is, though, a requirement that US-made goods be exported on US-made vessels.

But, while existing Chinese-made vessels serving The Bahamas and wider Caribbean may not attract the fee, the US National Law Review also warned that a draft ‘executive order’ - needing only Donald Trump’s signature to take effect - is separately proposing to levy tonnage-based fees on Chinese-made vessels entering US ports although no details or mechanism for how this will work are known.

“That’s the way it should be, but the shipping companies are not taking it that way,” Mr Roberts told this newspaper of the suggestion that the US fee would only apply to, and be determined by, new Chinese-made vessels. “They’re not taking any chances. They’re flying to Washington to get what they think it says rescinded.

“That would wipe out Tropical Shipping. It would wipe out most of the shipping around The Bahamas, and wipe out The Bahamas. Then the freight would cost more than the goods. That can’t happen. If it’s the way we took it to read first, then it’s really devastating if it’s not changed. It has to be changed. We cannot say it’s not changed.

“If it’s not changed, we should appeal to the US congress and courts. The Prime Minister should appeal to the US State Department and Mr Trump personally. If it’s the way we thought it was it’s beyond serious. The way I estimate it, it’s at least 25 percent [inflationary increase] because everything, most of our goods, come from the US,” the Super Value chief continued.

“We probably have Tropical three times a week; 15 containers three times a week. That’s fruit and vegetables, meats and dairy and our groceries. Of course, a lot of stuff comes from other parts of the world, but some of them are shipped on Tropical. Like I predicted, it would be a 25 percent increase in inflation.”

Mr Roberts, though, voiced optimism that the US is not deliberately seeking to “wipe out the Caribbean”. He added that economic sense was likely to prevail, given that the proposed fee would likely also devastate the multi-billion dollar annual trade that US export industries enjoy with the region.

Tropical Shipping last week warned customers in this nation and elsewhere that the plan put forward by the US Trade Representative’s office would have “a far-reaching financial impact” on import-dependent Caribbean nations with ocean freight rates likely to increase by “thousands of dollars per TEU” or twenty-foot equivalent unit container.

The proposal, which is currently undergoing public consultation in the US, is already experiencing strong opposition and headwinds from American exporters, shipping companies and port operators due to the perceived harmful impact it will have on their costs, staffing levels and business they do with The Bahamas and other regions.

The feedback period, along with a public hearing, ends on March 24, 2025 in just one week’s time. The US National Law Review, while acknowledging that the wide-ranging push back means the US Trade Representative Office’s will have challenges developing something workable, and could drop the scheme altogether, warned against writing-off the Trump administration given how fast it moves.

The process requires that any proposed rule involving the imposition of port call fees on Chinese-made ships be finalised by April 17, 2025, with implementation potentially following as swiftly as 30 days later in mid-May. Tropical Shipping is sounding the alarm because most of the vessels serving the Caribbean region are Chinese-made and would thus be subject to the new fees.