By Lincoln DePradine

A trade dispute is simmering. On the one side is the United States and its leader, Donald J. Trump; and on the other are Canada, Mexico and member-nations of the European Union (E.U.). And this dispute, if not resolved amicably, could adversely affect regional economies, including Grenada’s. It could be the worst economic Tsunami since international banking crisis and a global economic downturn of 2007/2008.

On the surface, it may seem that Trump versus Canada, Mexico and the E.U. has absolutely nothing to do with Grenada and the Caribbean, where the focus is heavily on recent general elections or pending ones; or on the next big entertainment show, such as carnival celebrations in Grenada and in St Vincent & the Grenadines. But, Grenada and its regional neighbours ought to be vigilant; the outcome of this latest issue involving their wealthy northern allies could negatively impact Caribbean economies.

The latest spat and the unravelling of things started after President Trump announced that his administration was imposing tariffs on aluminum and steel imports from Canada, Mexico and the E.U. President Trump warned that if the affected countries retaliated to his tariff imposition, “they’re making a mistake”. The warning, however, appears to have fallen on deaf ears.

Canada’s Prime Minister Justin Trudeau said Mr Trump’s new trade penalties are “totally unacceptable” and “unnecessary’’. Jean-Claude Juncker, president of the European Union, said the E.U. would move ahead with tariffs that are expected to affect roughly $7.5 billion worth of U.S. exports. And, the Mexican government said that it, too, would retaliate with its own comparable penalties on U.S. products including pork, fruit and cheese.

The dispute, rather than being settled at a meeting of western leaders at the 2018 G7 Summit in Quebec, Canada, only worsened. Prime Minister Trudeau reiterated Canada’s position to take retaliatory action by imposing its own tariffs on U.S. exports, saying: “It would be with regret – but it would be with absolute clarity and firmness – that we move forward with retaliatory measures on July 1, applying equivalent tariffs to the ones that the Americans have unjustly applied to us.’’ Mr Trudeau added: “We are polite and reasonable but we would not be pushed around.’’

Prime Minister Trudeau’s comments angered Mr Trump who took to twitter with name-calling, describing the Canadian leader as “very dishonest and weak’’.

“Canada has treated our agricultural business and farmers very poorly for a very long period of time,’’ the president claimed. “We’re like the piggy bank that everybody is robbing and that ends,’’ said Mr Trump, who points to high tariffs imposed on United States dairy products entering Canada as an example of unfair U.S./Canada trade. He fails to mention, however, that overall the U.S. has a trade surplus with Canada. The U.S. goods and services trade surplus with Canada was $8.4 billion in 2017, according to the Office of the United States Trade Representative.

If this trade dispute continues and expands into a trade war, it inevitably would lead to higher prices for some goods and services in Canada, the U.S. and Europe. And, at the very least, some of those higher prices will be passed on to Grenadian and Caribbean consumers, who import goods from North America and Europe.

In the immediate aftermath of the Trump/Trudeau public feuding, the Canadian dollar began trading lower. Many Grenadians have relatives and friends in Canada that make remittances to them. For every drop in the value of the Canadian currency, it means that people living in Grenada and other parts of the Caribbean will be receiving less for the money sent to them from Canada.

The impending trade war is coming at an inopportune moment for the Caribbean. Several countries are still trying to rebound from the effects of Hurricanes Irma and Maria of 2017. Dominica, apart from the tragic death of some of its citizens, also suffered an estimated US$900 million in Hurricane Maria damage. The death toll and economic loss for Puerto Rico were even higher. Puerto Rico was hit by both Irma and Maria, which caused an economic impact of more than $40 billion.

A report from the London-based World Travel and Tourism Council said the English-speaking Caribbean’s tourism sector lost close to US$700 million in revenue. The council said the 2017 hurricane season also resulted in almost one million fewer visitors to the region last year.

The devastating hurricanes of 2017 slammed the Caribbean as the countries were limping their way out of the prolonged global financial and economic crisis; a crisis that was responsible for the retrenchment of thousands of workers in the tourism industry across the Caribbean.

In a September 2016 interview, Caribbean Tourism Organization secretary general, Hugh Riley, admitted that regional countries were still trying to recover from the effects of the global crisis that begun in 2007/2008.

Caribbean leaders, including our own Prime Minister and Minister of Finance, Dr Keith Mitchell, must carefully monitor this looming trade war of the G7 nations. Measures ought to be put in place to cushion the fallout that a trade would have on the economies of the Caribbean region.