Jamaican Firms Urged to Keep a Close Eye on Trade Tensions

Amid rising fears of trade tensions, local firms are being urged to prioritise supply chain mapping to spot potential supply disruptions and develop contingency plans.

Senior Director, Regulations, Policy, Monitoring and Enforcement at the Jamaica Special Economic Zone Authority (JSEZA), Ainsley Brown, in making the call, said that supply chain mapping was a successful strategy for businesses during the COVID-19 pandemic.

“The businesses that did supply chain mapping, like a GraceKennedy, for example, barely had any disruption in their production because they had already built certain things into their system like alternative sourcing,” he pointed out.

Mr. Brown was delivering a presentation at the Business Acceleration Centre (BAC) Accelerator Series at the Terra Nova All-Suite Hotel in Kingston on Thursday (February 6).

Supply chain mapping allows companies to identify potential disruptions like geopolitical instability, natural disasters, or supplier failures, enabling them to develop plans and mitigate risks effectively.

It also helps to improve efficiency and reduce costs.

The process involves gathering information about all stages of a product’s journey, from raw materials to the final customer, including suppliers, manufacturers, distributors, and retailers, identifying potential bottlenecks, and areas for improvement.

Mr. Brown, in emphasising the importance of the process, pointed out that it allows enterprises to pivot and identify alternative suppliers in the event that tariffs are imposed on goods from specific countries.

He noted that while the threats of trade tariffs announced by the United States (US) do not directly apply to Jamaica, the island is not insulated from the impacts.

“If you think for a moment that Canada and the United States (US) and Mexico are having issues and we’re good, think again; we’re not good,” he pointed out.

He noted, for example, that as a result of the tariff threats, many Canadians are cancelling cruises leaving from US ports for other destinations, including the Caribbean, which could impact Jamaica.

Mr. Brown contended, further, that any trade tensions could impact the Caribbean Basin Initiative (CBI), through which Jamaica benefits from zero per cent duty access to the US market for products like hot pepper sauce, yam and rum.

He cited the potential consequences if Jamaica were to lose its CBI status.

“Without the CBI… anybody exporting hot pepper sauce should be ready for your product to go up… by 6.4 per cent,” he pointed out, noting that rum exports could face a 23.7 per cent duty.

Beyond direct tariffs, he noted the risk of “more expensive inputs into production”.

As a trading nation, Jamaica relies on imported goods and services for its export production.

Trade wars and tariffs could increase the cost of these inputs, making Jamaican exports less competitive.

Additionally, with the US representing a significant export market for Jamaica, potential trade tensions could have a major impact on the nation’s economy.

The US accounts for about 50 per cent of Jamaica’s goods exports, totalling US$1.01 billion annually.

A reduction in this export volume, even by a small percentage, could impact the country’s earnings.

Source: JIS