CARICOM Could Save US$1.3 Billion Annually by Diversifying Imports Away from the United States, Says CPSO Study

A groundbreaking regional private sector study has revealed that Barbados and other CARICOM member states could save up to US$1.3 billion per year by strategically diversifying their import sources away from the United States.

The CARICOM Private Sector Organization (CPSO), which conducted the research, presented its findings at a recent hybrid forum in St Kitts and Nevis under the theme: “Derisking CSME Imports: Examining the Scope for Goods Market Fulfillment from Non-Traditional Sources.”

Rising Costs of U.S. Dependence

CARICOM currently ranks as America’s third-largest import partner, sourcing nearly 70 per cent of its final goods—valued at approximately US$7.7 billion—from the United States.

While this long-standing trade relationship has supported regional consumer markets, the CPSO warns that overdependence on U.S. imports has become increasingly costly.

• The region’s goods trade deficit with the U.S. widened by US$200 million between 2022 and 2023, and by an additional US$300 million between 2023 and 2024.
• Projections show the deficit could rise by another US$500 million in 2025, excluding tariff impacts.
• The new U.S. tariff regime, imposing 10–15 per cent duties on previously duty-free items, is expected to exacerbate the situation significantly.

In July 2025, U.S. reciprocal tariffs on Trinidad and Tobago and Guyana alone translated into a forecasted export-revenue loss of US$653.6 million for the region.

Secondary Inflationary Pressures

Beyond direct tariffs, the CPSO cautions that Caribbean states face secondary inflationary effects. Many goods shipped to the region first enter U.S. ports before transshipment, making them subject to tariffs and additional costs.

Combined with rising domestic labour costs, these price shocks threaten to erode consumer purchasing power and raise the cost of doing business. In particular, the competitiveness of Caribbean tourism—the lifeblood of many economies—could be undermined as operational expenses climb.

Vulnerability of Smaller States

The Eastern Caribbean Currency Union (ECCU) stands out as particularly vulnerable. Collectively sourcing over 44 per cent of imports from the U.S., ECCU member states primarily import finished goods with limited scope for value-added production.

Unlike larger CARICOM states such as Trinidad and Jamaica, which can import raw materials for processing and re-export, ECCU economies are heavily reliant on final consumer products—making diversification both more challenging and more urgent.

Identifying Alternative Markets

The CPSO study analyzed 1,251 product lines valued at US$9.1 billion, identifying vast opportunities to cut costs by shifting to alternative suppliers.

• 32% of non-fuel goods, including essential food imports, could be obtained more competitively elsewhere.
• 23% of mineral fuels could also be sourced at lower prices.
• In total, 94.7% of non-fuel imports and 85.8% of overall imports (including fuel) could be substituted with alternative suppliers.

Promising markets include Malaysia, Brazil, the Netherlands, Spain, Turkey, South Africa, Estonia, Bulgaria, Portugal, and Mexico. Some, like Turkey and South Africa, reportedly offer goods at half the price of U.S. equivalents.

Logistics, Connectivity, and Policy Shifts

Realizing these savings requires more than just identifying alternative suppliers. The study emphasizes the importance of trade facilitation and port logistics.

• Jamaica’s Kingston Port and Trinidad and Tobago’s Port of Spain currently provide the strongest regional connectivity.
• Many smaller OECS ports lack direct liner connectivity, making it difficult to establish new supply chains.

CPSO leaders, including Chairman Gervase Warner, argue that port upgrades and modernized logistics are critical if smaller states are to reap diversification benefits.

Similarly, Eastern Caribbean Central Bank (ECCB) Governor Timothy Antoine urged member states to leverage the region’s strategic geographic location between the Americas, Africa, and Europe to develop into a bidirectional trade hub. He emphasized that this shift could fuel a new growth engine, complementing initiatives in energy security and digital transformation.

Strategic Implications for CARICOM

The CPSO recommendations position import diversification as a cornerstone of economic resilience:

1. Cost savings: US$1.3 billion annually could be retained within CARICOM economies.
2. Consumer protection: Reducing reliance on a single supplier shields households from volatility.
3. Competitiveness boost: Manufacturing and tourism sectors could benefit from lower input costs.
4. Regional integration: Improved logistics could deepen the CARICOM Single Market and Economy (CSME).

However, the study also highlights urgent policy reforms needed to unlock these benefits, including:

• Harmonizing trade facilitation rules.
• Investing in port and logistics infrastructure.
• Encouraging private sector participation in developing new trade linkages.

Conclusion

The CPSO’s findings underscore a historic opportunity for CARICOM to reduce its economic dependence on the U.S. and strengthen its resilience in the face of shifting global trade dynamics.

If member states act decisively, the region could save over a billion dollars annually, foster new commercial relationships with emerging markets, and reposition itself as a strategic logistics hub linking three continents.

For Barbados and its regional neighbors, diversification is no longer optional—it is essential for long-term growth and stability.

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