Yesterday’s inauguration of Donald J Trump as the 45th president of the US requires the administration in Port-of-Spain—and other governments throughout the region—to be strategic in the protection and promotion of Caribbean interests. Whether this is through professional lobbying efforts in the corridors of Washington DC or otherwise, T&T’s voice needs to be audible in the power centre of our largest trading partner, the source of most of the nation’s foreign reserves and investment capital and the home of many of our sons and daughters.
To cite just two examples, in the long campaign to become president, Mr Trump expressed antipathy to undocumented immigrants and a desire to renegotiate the North American Free Trade Agreement (NAFTA) between the US and its neighbours to the north and south to ensure that America gets a better deal from the three-nation free trade pact.
Does T&T have a plan in place to deal with planeloads of its undocumented nationals and those with criminal records being deported from the US with little or no family connections or job prospects?
Indeed, do the local law enforcement authorities know if there is a link between deportation and increased criminal statistics ?
On the issue of NAFTA, if President Trump goes ahead with his threat to impose tariffs on products from Mexico, and the Latin American country retaliates, what impact will a trade war in this hemisphere have on T&T and the Caribbean?
Such an eventuality could create opportunities for agile T&T entrepreneurs and should even cause regional countries to consider pressing the case of a free trade agreement between Caricom and the US.
A third thorny issue is President Trump’s dismissal of climate change and his wish to push American shale oil and gas production to make that country self sufficient in those commodities in the near future.
Indeed, it is in the energy sector that the Trump presidency most threatens the interests of T&T.
If, for example, President Trump fulfils a campaign promise to lower corporate taxes in the US, that action alone may provide even greater incentives to the LNG facility and the local downstream producers of ammonia, methanol, urea and iron and steel to relocate their operations to Texas or Louisiana from the Point Lisas Industrial Estate, where natural gas from Trinidad’s north and east coasts is monetised.
In order to remain competitive and retain the Point Lisas industries, T&T would then be in a position of either having to make substantial cuts to the taxes on LNG and the petrochemical industries or reduce the Treasury’s take from natural gas…or both.
Either way, T&T’s energy tax receipts will suffer, which will have a direct and corrosive impact on the quality of life that T&T residents have come to enjoy, in terms of the massive subsidies to water, electricity, healthcare and education that many have come to believe is their birthright.
In other words, future US fiscal policy has the potential to take bread and milk out of the mouths of Trinidadians.
In coming to terms with whether the Trump presidency is either threat or opportunity, the administration led by Dr Keith Rowley should err on the side of caution by ensuring that the nation’s finest minds conduct a thorough assessment of the potential impact of the proposed tax changes in the US on T&T.
This is perhaps a job that the Economic Development Advisory Board should be tasked to look at as a matter of urgency.
