Speaker: Dr. Maj Hugh Blake – CEO & Trade Administrator at the Trade Board Limited 
Virtual Biz Zone Webinar – Topic: Export, Tariffs and the Jamaican MSME
Okay, so this morning, as we said earlier, we are going to be speaking a bit about exports, tariffs, and Jamaican MSMEs. Now, as you can well imagine, the whole business of tariff is a very topical issue, and I think we're all aware of the reasons why. So what we want to do this morning is look at just how this whole change in the U.S. tariff policy, how that's going to impact us as exporter-importers, what it means for Jamaica, and not just businesses, but Jamaican citizens as a whole.
So what are some of the strategies that we can use to navigate this sort of new environment? Okay, I wanted to also say at the outset that things are very fluid, right? Just about every morning you wake up, you hear something new. And so, you know, what we are presenting has to be sort of placed in that context of the fluidity of things. And so things may change significantly, nothing is cast in concrete, and so we have to remain very flexible in our thinking and in our assessment of everything.
All right, so who are we really? You know, we're the trade board. I mean, we're here to speak with you this morning, and I suspect that a lot of you might be wondering why the trade board? Most people, when they think of trade board, they think of motor vehicle import licence. A young lady the other day told me, oh, the trade board.
I said, do you know anything about trade board? She said, yes, they are the ones responsible for issuing motor vehicle licence. And so we were seen in that very narrow scope. So let me just do a brief introduction of who we are, so that you can put that to rest.
So we are an agency of the Ministry of Industrial Investment and Commerce, and we consider ourselves as facilitators and regulators. And we're primarily concerned with the movement of goods across our borders. We ensure that there's compliance with our trade policies.
We issue import-export licence for specified commodities, not for everything, but for specified commodities. And we certify goods on the preferential trade agreements. Those are some of the things we do, particularly when it relates to cross-border activities, trading activities.
The other thing we do is that we are responsible for the provision of trade-related information. That's one of our mandates. And so to execute that, we operate what we call the Jamaica Trade Information Portal.
We have two new initiatives, Export Jamaica and Export Academy. And I won't say much more about those here, because later in the presentation, we'll take a closer look at these. But these are the avenues through which we provide information and some amount of training, particularly to exporters.
We also certify new and used car dealerships, scrap metal, and scrap metal traders, which is a big part of what we do. We have a whole section of the trade war that focusses on that. And we manage the refined sugar and milk powder regimes.
So that is basically who we are. So what is the aim of today's presentation? My presentation today aims to help MSMEs understand and navigate the evolving trade environment with highlights on tariff, because tariff is a very topical issue and it affects all of us. We're also going to be providing some practical solutions that can assist to ensure that you maintain some level of success in the global market space.
Let's look at the situation. Let's do a little bit of situation analysis, which sort of forms the backdrop to the presentation as we go along this morning. As of April the 5th, 2025, the United States has imposed a 10% baseline tariff on imports from all countries, including Jamaica.
Of course, we know China, and I think one other is a little different. I think China is now down to 30% from about 145 that was initially mentioned. But what the baseline tariff means is that that is the base level of increase that's applicable just about for everybody.
Again, from speaking with one of our clients, who basically said to me, well, it's just 10% tariff on the goods that are being imported into the United States. I said, well, it's not only 10% tariff, because it's a 10% increase. If you had a 3% or a 4% or a 5% before, you have to add that 10% to it.
This idea that it's just 10%. Fortunately, in Jamaica's case, most of our exports were going out under the CBA. Nearly 90% of Jamaican exports to the United States went out on a Caribbean-based initiative.
Again, don't worry yourself about the Caribbean-based initiative. We will explain that a little later on in the presentation. But because 90% of our products go out under the Caribbean-based initiative that's going out to the United States, they were basically going out duty-free.
Really, 10% has become what I like to call a new zero, because that's where we start from. It's zero plus the 10% in our case. It's not like we had something there before, and we're adding 10%.
The tariff is part of a broader U.S. trade shift. The question is asked, why is the U.S. doing this? The U.S. is doing this because their explanation is that they're trying to balance their trade. They have a trade deficit, and they're trying to balance that deficit.
They want to also increase their domestic production. Now, we could argue all day long whether this is a way to go to achieve this objective, but I don't want to go there. I have my own feelings about that, and I'm sure you have yours as well.
So let's leave that. That's what they're saying. That's their stated intention.
The White House has described tariffs as reciprocal, which means that the same level of tariff is applied by Jamaica. That's a 10% tariff on U.S. imports into Jamaica. That's what reciprocal means.
You slap me 10, I slap you back 10. That's what the reciprocal arrangement means. Continuing with the situation analysis, it's important to note the three industries that are most impacted by this new set of tariffs.
Clearly bauxite and alumina, which Jamaica exports a significant amount of, that will be impacted. Agricultural products, including coffee, rum, and bananas. These are key exports to the United States, some more than others.
And, of course, manufactured goods, especially processed foods. And, you know, banana chips and spices and so on. These will face increased costs, which would impact our competitiveness if there are cheaper sources for these products going into the United States.
So it's important to note that. Continuing with the situation analysis, I think it's important also to, and this is where we take a closer look at the Caribbean-based initiative, which has historically provided duty-free access for Jamaican goods. So these may be, this initiative is likely to be, well, let me put it this way.
First of all, it was not a trade agreement. If you notice there, I have arrangements, really a trade arrangement. Okay.
And as it stands, there is no definitive word as to whether the CBI will be something of the past. Or whether it will still be relevant, applicable. To date, we are still, companies are still exporting on the CBI.
The Ministry of Foreign Affairs and our own ministry, they are working assiduously at getting clarification on this matter. But it's not an agreement, so it really is something that the United States has extended to us. And they really are at liberty to retract it.
Okay. So that agreement is at risk. Not agreement, that arrangement that we have is at risk.
And that's a big risk for us. So let's just look a bit now at what this tariff is all about and what it actually means. Because a lot of persons speak about tariffs in all sorts of terms.
You know, I've heard people say that, well, it's a tax. It's all sorts of descriptions. I don't want to get into those.
And then you only need to have been listening to the President of the United States. And you would have heard a different version of the description of what a tariff is. But you need to think of tariffs as extra fees imposed on imported goods.
And it's paid by the importer. Now, I know that at times we can argue whether the importer is the same as the exporter. And in fact, there are circumstances where the exporter is the same as the importer.
So, but the importer is the one who pays the extra fees. I think the best way to sort of explain this is to give you an example. So 10% tariff on Jamaica exports to USA means that when Jamaica businesses send products to the United States, the importer now have to pay 10% more just to enter that market.
Simply put, pay 10% more for your goods to enter the market. So let's take an example using the same 10% tariff. Imagine you own a ginger farm in Jamaica.
You usually export 1,000 pounds of ginger to the USA. At $20 per pound. So that will earn you $20,000, right? 1,000 times 20,000.
With a new tariff, an extra 10% fee is charged, which is really 10% of 20,000 is $2,000. So with the new 10% that is charged, the customer now has to pay $22 instead of $20. So, which of course, as you can imagine, may make your product less attractive, right? Because it's more expensive.
And that could potentially reduce your sale, force your customer to try and find some other, some cheaper source. It starts a chain reaction because nobody sits down and accepts a sort of situation where they feel that they are disadvantaged, right? Right away, you start to look for alternatives. So instinctively, you start looking outside for alternative supplies.
So those are some of the risks that you face in this kind of situation. How does this affect Jamaican SMEs? Well, let's take a look at the industries that are most affected. New tariff directly impact industries such as bauxite.
Bauxite and alumina is not under the MSMEs umbrella. But then you have agriculture and all manufactured goods, right? Now, this could result in higher costs for US buyers, meaning that they might choose cheaper alternative, as explained before. It reduces your competitiveness.
I don't think there's any case where there's any lower tariff than what we would, than what we, any tariff that's lower than us. Because as I said before, we were zero. And now we are at the base, which is 10%.
So that's applicable to just about anybody. But the principle of it is what I want you to understand, right? That it reduces your competitiveness. I just want to go back a little bit to the first point about high costs to the US buyers.
You know, remember that at the end of the day, it is the consumers, everyday consumers are going to be purchasing these items, right? So unless there is some significant salary increase across the board in the United States, people are going to have to pay more money for the same product or goods. And so they are going to be looking around, right? And then there is the possible decline in export volumes. So demand in the United States is restricted or reduced because of the higher prices that affects us because you're not getting the orders in the same volume that you used to get before.
Because less persons are able to buy the products in the United States. I'm sure all of you are aware of the price elasticity of demand, that whole concept. And so at the end of the day, it means lower income or revenues for businesses.
And that, you know, can impact us in very negative ways. Now it's not just exports that we have to consider. We have to also consider imports, imports to Jamaica.
Many Jamaican businesses import raw materials to create their products. Some countries may retaliate by increasing the cost for their imports. No such announcement has been made by Jamaica, right? But it's important to know what other countries are doing.
But this could make essential materials like packaging, machinery, and just the raw ingredients more expensive. And so your costs for your items that you're producing goes up. And when the cost for the item goes up and it becomes more expensive, the consumers, you know what happens.
There's a decline in demand and people begin to look for alternative sources. So let's give an example just to make sure that we are clear. Imagine you're a manufacturer who imports plastic containers to package sauces.
If those containers become 15 percent more expensive, you need to increase your price to cover the costs, which may reduce customer demand. By not may, it will reduce your customer demand. And for us, I mean, persons or consumers to look at alternatives.
So one of the things that we are forced to do is find alternative suppliers for your inputs, your materials. Moving on, what is the importance of the USA as an export destination for Jamaica? It's important to also have an appreciation for this. USA is Jamaica's primary export destination.
In last year, in 2024, we exported US $361.4 million, which is no small amount. A Caribbean-based initiative, preferential trade arrangements, which gave duty-free access for a wide range of goods, facilitated a lot of this. There are not many places around the world where we had that sort of arrangement.
And over 65 percent of Jamaica's trade is done with the USA. So the above underscores the importance of maintaining and enhancing trade agreements and arrangements with the United States. I hear some people just throw their hands up in the air when they heard about the 10 percent and, you know, say, well, let's do away with the USA, let's go somewhere else and so on.
It's easier said than done, and it's not what we're looking to do. Because, as you can see, they are quite significant and a bit of a lifeblood for Jamaica. So bear that in mind.
What is the Jamaican government doing? Jamaica is actively negotiating with the U.S. to seek exemptions for certain products. They're also working with CARECOM Nation to present a regional approach to reducing trade barriers and, you know, to negotiate and lobby as a region. They're exploring new export markets, Latin America, Africa, et cetera.
And advising businesses on how to adapt to these changes. Now, back to the ginger example. If these negotiations are successful, and there's a big if, there's no certainty there, Jamaican ginger, et cetera, may become exempt from the new tariff, meaning it can still enter the United States without any extra charges.
That's just a simple example. So that is the approach that the Jamaican government is currently taking. As I said earlier, the whole situation is fluid.
And so there's a lot of work being done to try and understand and to make the decisions that are in the best interest of Jamaica. You can't respond to the situation by a sort of ninja reaction. You have to take the time to fully assess and understand what you're doing.
Now, before I go into the strategies that MSMEs may want to employ to help them survive in this kind of environment, I'd like to take the opportunity to see if there are any burning questions. Maybe we can take two or three burning questions to get those out of the way. So are there any questions? There are a few questions in the chat.
Brenda Weathers wants to find out if the tariffs have taken effect and if Jamaican exporters are now required to pay the 10% tax on goods and services that are being exported to the U.S. as of April 1. What was the first part of the question? Has the 10% taken effect? Is it now in effect? Yes. Okay. It is.
It is in effect. So that means that Jamaicans are now required, exporters are now required to pay the tax when they are exported. The tariff.
The tariff. All right. (Speaker: Malika Pottinger, Director of Exports at the Trade Board Limited) So as it relates to the tariff and in terms of exporters paying the tariff, we know that there is a two-pronged approach to this.
It can be that this person, this exporter, they can offset the tariff payments to their consumers, which is the importing party, or they can consume some of this tariff payment into their goods and then allow the person to pay the remaining. So that's like a 50-50% approach. But what we know now and what we've been seeing cascading in the market is that most exporters are off-putting that 10% tariff payment to the American citizens that are importing.
So as of now, Jamaicans are not the ones who are paying those tariffs. It's the business counterparts, those importers of the United States. Okay.
Okay, great. Thank you. Remember I said it's the importer who pays it, right? So unless you are exporting your product to the United States and then you are the same one who is going to be receiving it over there and the same one who Is going to be selling it over there then you clearly would have to be paying that 10%. But it is usually the importer. The thing that you have to consider is that things will become more expensive because they are gonna pass on that costs to their consumers. All right, another question. Although the tariffs are reciprocal, does it violate the CBI agreement in any way by implementing the 10% tariffs on Jamaican goods? Right, right.
So first thing to bear in mind, as I said earlier, CBI is not an agreement. Okay, so it's not like, you know, you can't call agreements or anything like that. It is just an arrangement, something that the United States has extended to us.
Yeah. And yes, Malika, go ahead. If I may add to that, in terms of reciprocity for the agreement, or for the technical arrangements with us and the CBI in the U.S., initially the CBI was not reciprocal.
Unfortunately, as Dr. Blake would have alluded to earlier, that this 10% tariff is not a baseline. This is what we're going to be working with as a zero baseline going forward. Now, this 10%, it is reciprocal.
However, what we are forecasting is that if a product is exported onto the international market, and it still has some benefits under the CBI, it means that the reciprocity for that 10% will stand based on the product. So if you're importing the product, that 10% will be applied on the local market. And if you're exporting the product, the 10% will be applied on the international market.
What I'm getting at is that what we're forecasting is that, separate and apart from the fact that this 10% has been imposed, the existing tariffs that were there before this 10%, you can be given preferential treatment should the product still qualify based on added value, rules of origin that is outlined by the CBI itself. I'm not sure if that answers the question. All right.
I hope it does. If it doesn't, I would ask that the individual just send another question. Yeah.
One final question before you continue, Dr. Blake. Are there any red flag countries or destinations that I should avoid or require special clearance for? And I suspect the person is not speaking about the United States, but is there any other country that presents a red flag when you're planning to export? Okay. So that's a question that a lot of persons ask.
But what I would like to suggest is that, and we'll explain a little later on what the tool is all about, but Export Jamaica actually indicates to you what are the best countries to export to. It's product specific as well. So you can go and export Jamaica and try with the best countries to export to.
One of the features of Export Jamaica as well is that it tells you the businesses to avoid the blacklisted companies. I don't believe that there's any blacklisted country, but there are blacklisted companies. I wouldn't want to say to you, don't try anywhere, right? Because in the worst of places, you can still find a reputable importer.
So it really is up to your judgement. But at this point in time, I know of no country that I would want a red flag as such. What I would ask you to do is do the research, go on Export Jamaica and get the information before you get into any business arrangement with anybody, because it gives you a good overview of the country, the possibilities for your product, it puts you in touch with what should be reputable importers for your product, et cetera.
And so you can sort of minimise the risk by going that route. Thank you so much, Dr. Blake. You may continue.
So what are some of the strategies for MSMEs? If you run a small or medium-sized business, here are some of the strategies to protect your profit. Firstly, explore new markets. I think a lot of us are limited when we think about exporting overseas to the United States, Canada, U.K., and maybe one or two other areas and so on.
But there's a whole wide world out there. And Jamaica has this fantastic brand that really creates a nice pathway, a bridge that you can exploit. So we need to look beyond the U.S. to other places.
And as mentioned earlier, we have a tool that can assist you to do that. The other thing is that we need to focus on branding and quality. Ensure that your product stands out so that customers see value even with the price increase.
So I like to use the example of what Barbados did when their sugar industry came in and they had to do away with it. They're still producing a small amount of sugar. I don't think a lot of people even realise that.
But what they have done is that they have packaged small quantities of sugar that the tourists and sell to tourists. But the packaging is so such high quality with a nice romantic story that creates some emotional attachments that the product still sells and sell even for a better price than the raw sugar that they would traditionally export. And they have, around that sugar, created a really strong brand.
So you can do the same. Focus on your branding and quality. If the consumer recognises that your product is of a certain quality, they make some emotional attachment to it because you can always romanticise anything coming from Jamaica.
They will still be willing to buy your product even at a higher price. So that's something to bear in mind. You need to join export support programmes and user sources, as I mentioned before, like Export Jamaica.
You need to negotiate with your supplier. You almost take it that, you know, you can't do anything about the situation. You need to get back to your supplier and say, listen, I need a better price.
Get into that mood. Find local alternatives, if that is at all possible, so that you can reduce the dependence on foreign material. One of the beauty about Export Jamaica, which is not often spoken about, is that it is equally an important tool for finding suppliers of materials.
You can use Export Jamaica and literally search all over the world for suppliers of whatever you need. So those things are in place, and I keep going back through it because I believe it is a key in helping us to survive these times. So make sure that you explore, find alternatives.
The other thing that we need to do is manage our expenses. I didn't put anything to qualify that, but you know very well what I will be speaking about. A lot of times we go for the most expensive options because it's convenient and so on.
But we need to look at managing the expenses around what we do. Safeguarding your cash flows, your operating funding, your funds for your business. This is where you may want to consider linking with other producers of similar products to yours where you can do some joint movements of your products.
Take advantage of consolidations of your products to reduce export costs and so on. You may even want to buy certain raw material in bulk and negotiate better prices so that you're able to keep those expenses low. A word of caution though, because what a lot of businesses tend to do is, wow, we're going to be faced with a 10% tariff increase.
Let's buy up as much as we can and keep it in storage, especially because we are in uncertain times. But you have to be careful about that because you can cripple your business by overemphasising any one area. So you build up your inventory and you're tying up a lot of cash right there.
Your cash flow is suffering. Your operating funds are suffering because you have all of that stored up inventory. So I'm not saying you must store inventory or increase inventory, but you have to be able to balance things out properly and not overdo any particular area.
You have to stay what I like to call nimble and agile, flexible to survive in these times. Don't tie yourself up too much with any one commitment. Spend your money in buying raw materials and tying up your funds.
But strictly speaking, expenses really is another category of things, not necessarily your operating costs. But it's one of the same if you talk about managing your working capital and your cash flow and so on. I see a lot of businesses that has the potential, for example, to reduce things like your energy costs.
It may be a one-off expense that's a little bit burdensome, but shifting solar into your small business so that you don't have the heavy recurrent electricity cost is something that you may want to consider. So look at those expenses and best way of managing them. You need to work with the government agencies like the trade board and JBDC and Jamf Pro and so on for guidance, especially JBDC that has a tremendous amount of programmes that is there to assist you, the trade board as well, where we can help or answer questions.
We will hand you over to assist the agency that is able to assist, but you need to do that. I know that there are a number of challenges faced by MSMEs and some of them are age-old problems, high import costs. Many MSMEs rely on import raw materials, so when prices go up, it makes their production much more expensive.
Those are some of the difficulties. A lot of companies are faced with difficulties, small businesses are faced with difficulty of getting funding. It's tough for small businesses.
I know that. A lot of the toughness simply comes because businesses are unable to articulate where they're going and show a plan that makes a lot of sense to a potential financier. That is one of the difficulties.
The new tariff, of course, we have spoken about that. That's something that's new, that's added to all of these difficulties that you face. Then there is the complex trade rules and so on.
Once you start going overseas, you have to be able to manoeuvre and straddle to do business. These things limit your opportunities. There are a number of things that you can do to help you in this situation.
I put this slide here because I don't want you to believe that I am just speaking without understanding what you're facing. We can have some more discussions around this as we go along. Some of what you do about this will come out later.
Right now, I want to look at some of the opportunities for MSMEs to grow and to thrive. Clearly, the opportunity is there for you to find new markets. We spoke about that at length, so I won't go into that.
Accepting to say, find Export Jamaica, find a tool and use it to your benefit. Use online sales. Don't be afraid to get into that digital space.
Sell through e-commerce platforms. It allows you, it's a convenient, cheap way of basically reaching the entire world. You can get your product into every crevice in this country, in this world by going this route.
Everybody has a cell phone, almost, and your products can be advertised and sold through these means. You can pay your bills. You can do so much, but you must transition your business to online sales.
This is one of the key things that I would suggest. I'm not saying that there is no need for brick and mortar and so on, and a storefront. There's no need for that, but you can do both.
You can sell using online means as well as open stores. It's much, much cheaper to do than to go the traditional means of television, ads, radio ads, and so on. In fact, my understanding is that not knocking the news media and so on, the media houses and so on, but those things are, those areas are not, those means are not being used as frequently because they don't have the audience that they used to command.
Everybody is now on social media and so on, and Malika, being a few decades younger than I, will be able to probably expand on this area when she gets the chance to, okay, by getting a bright smile. Okay, you need to partner with other businesses, work together with MSMEs, working together with other MSMEs can help share costs and resources to enter new markets. Spoke about this earlier, but these are real opportunities that are there for you.
Government support. GBJ has $2 billion in fundings available for SMEs looking to expand their exports. I don't know about you, but if I was running a small business and I hear that, I am in there.
I'm going to find out how I can carve out a piece of that to help me. Also, Ex-Im has numerous financial products that can assist exporters. Let me tell you something, knowledge is power, and you must make yourselves informed about what is out there that can assist you, what's available to you.
You must make the effort to find out. MSME decision-making helps you to make more accurate decisions when you have information. Traditionally, everybody heads to the commercial banks where the most expensive monies are.
There are other means of raising finances that you need to consider. And I could speak a little bit more about that, but I leave that here because there are all sorts of different avenues for raising resources, especially if you are willing to sort of give up some of the ownership of your business or temporarily give up some of the ownership of your business. We spoke about managing expenses before.
I didn't mention about eliminating waste. Automation, we spoke about that. Focus on essential costs that support the core operations.
Let me give you a word of warning. Do not cut corners. And by cutting corners, I mean, instead of doing the product a certain way that gives you a certain quality outcome, you do it another way that is cheaper looks the same, might even fool the customer for a while.
But you're compromising your reputation and your quality. And later on down the road, you're going to lose business because you're damaging reputation of your product as a quality product. You're damaging your brand.
So do not cut corners. Maintain your quality standards. Up your price if you have to, but do not cut corners.
That is almost instinctive for us to want to do that. But please don't, especially if you're talking about exporting. You're going out into the world where you're competing against other products.
Do not cut corners. I mentioned before about negotiating with suppliers of raw material. Ask for bulk discounts, extended payment terms, and of course, explore alternative suppliers.
Focus on branding and quality. I mentioned that before. Join export support groups such as JMEA, Small Business Association, et cetera.
If not just for the rich discussions and ideas that will be exchanged as a group and to have lobby groups. You need to manage your business to give flexibility and agility. Manage your operating costs.
Avoid crippling your cash flow by carrying through large inventory of raw materials. I'm repeating myself here. I said that earlier.
And you need to stay informed. There's significant value in information. Read, ask questions, consult relevant government agencies, and make use of the online support tools provided by government.
Export Jamaica. Jamaica Trade Information Portal, that we'll talk a little bit more about. You don't know how to export? You're afraid to export because you don't know how to export? There's an Export Academy.
Make use of that. We are going to show you a little from now what are the essential aspects of some of these tools. Now, how MSMEs can take advantage of trade agreements.
There are a number of trade agreements that the Jamaican government have gone through over time. Significant efforts to negotiate with different markets. All of these provide preferential terms, ranging from duty-free access to preferential access, meaning reduce duties, and so on, that you must make sure that you are aware of because they are offering tremendous benefits.
We spoke about the CBI earlier. No need to speak about that anymore. The dust is not yet settled on this, but we from the trade board, and we're still issuing certificates of origin under the CBI, so that exporters are still benefiting under the CBI.
All right, so we don't know what the fate of this is yet. We are waiting to be informed, and the government is making every effort to clarify these things. So, in a little while, we will know exactly what direction that is going.
There's Terraforum EU agreement, which allows Jamaican goods to enter Europe duty-free and quota-free, so they're not restricting it, right? And this is managed primarily by Jamaica Customs Agency. They are the ones who you need to talk to mainly about this. But if you need information, you can speak to the trade board.
We have trade experts here who can advise you what place to go, really, for this particular Terraforum EU agreement with Jamaica Customs. And there's the CARICAN agreement, which allows Commonwealth Caribbean countries to export duty-free to Canada, with few exceptions. CARICOM, which is a Caribbean community single market and economy, CSME, where there is free movement of goods, services, labour, capital, which provides duty-free access, right, or reduced duties, once there is conformance to the established rules of origin.
And the rules of origin, really, is just saying that, under the agreement, we agree that a certain percentage of the inputs must be regional or from domestic sources. And what we do, we