The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian businesses have warned the US government that plans to levy up to $1m fees per port call on Chinese-made ships “will kill us” and “make no sense” for either this nation or American firms.

Peter Goudie, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) labour division head, in feedback submitted to the US Trade Representative’s Office prior to yesterday’s end to public consultation on the proposal, warned it will have a devastating inflationary impact for all this country’s residents in addition to inflicting immense damage on America exporters serving the Caribbean.

“The $1m service fee will increase costs substantially for goods delivered to the US which, in turn, will drive up costs for importers of goods from the US,” Mr Goudie told the US trade watchdog. “This will greatly impact most countries in the Caribbean, especially The Bahamas, which imports the vast majority of its imports from Florida.

“This will also force The Bahamas to find alternate suppliers in Canada, Mexico and Latin America, which will reduce business done by US suppliers. This will most certainly affect most Americans by driving up inflation, which makes no sense.”

And Cheryl Cambridge, principal of Cheryl Bahamas Taxis and Tours, was even more direct and to the point. “This tax will kill us,” she bluntly told the US Trade Representative’s Office of the proposed fee, which was yesterday subjected to the first of two days of intense scrutiny during public hearings in Washington D.C.

Mr Goudie, speaking subsequently to Tribune Business, blasted the proposed levy on Chinese-made vessels as “ridiculous” and “unthinkable” given that it threatens to create an outcome where “we’re all losing”. US firms will suffer a drastic drop in Caribbean commerce and trade, endangering their survival and American jobs, while The Bahamas and Caribbean would be subjected to devastating price and cost of living pressures.

Most of the vessels that service the Bahamian and Caribbean market are Chinese-made, thus exposing them to the proposed US fee if implemented in its current form. Apart from supply chain disruption, the fall-out is predicted to increase shipping costs to The Bahamas and wider region by 50-60 percent, sending import prices skyrocketing and also posing a threat to Bahamian companies and jobs.

“I just think it’s ridiculous,” Mr Goudie said. “I’m a member of the Chamber, and we got that notice through the Chamber and I did respond because we were asked to respond if we thought we could have some input which, of course, was negative.

“Charging up to $1m a ship on something coming into the US is really going to increase the cost of goods, which will increase the cost of goods to us. We’re all losing. I just think it’s unthinkable. The thing is, when they charge $1m a ship, Americans have to pay. Therefore, the cost of goods has to increase, and our cost of goods will increase as we import from the US.”

Mr Goudie warned that, if the US follows through by implementing the proposed fee, Bahamian companies will have to diversify their supply chain by sourcing products from other markets outside the US to escape the punitive Chinese-made ship fee. 

“That’s what we need to do if they keep all this tariff stuff up,” he added. “It’s just going to cost all of us, including Americans, more money. It’s a no brainer. I objected to it because, for The Bahamas and the Caribbean, it’s going to increase our costs and I’m sure it’s not going to improve the US ship building industry. That’s all I can tell you.”

Ms Cambridge, meanwhile, warned that the US proposal would inevitably raise costs and prices locally that will be passed on to tourists and other visitors to this nation. Pointing out that taxi fares would also likely have to rise, she added that it will also make the already-high cost of living worse.

As an example, she cited the complementary Bahama Mama drink that her firm provides free to all passengers upon arrival in The Bahamas. Pointing out that this used to cost $7.50 per gallon of juice to make, Ms Cambridge added that this has now jumped to $12.60 per gallon. Given that the company makes no money from serving the drink, she added that further cost pressures will drive an increase in fares.

However, Sir Franklyn Wilson, the FOCOL Holdings and Arawak Homes chairman, yesterday urged Bahamians to “look for the silver lining” rather than always focus on the negative elements associated with changes such as Donald Trump’s tariffs and the Chinese-made ship fees. 

Asserting that with every challenge comes opportunity, he told Tribune Business: “Let me tell you something. My view on matters like that is The Bahamas is in a wonderful position where, whatever happens, we have the capacity to navigate around it. Events that happen aren’t necessarily bad news for us.

“When these things happen, the fact of the matter is there’s also probably good news in it. Look for the silver lining; stop looking for the bad in it. There’s always a silver lining.” Sir Franklyn cited the increasing number of Canadians bypassing vacations and property purchases in the US as one such opportunity for the Bahamian real estate and tourism industries to exploit.

While tourism executives, including Graeme Davis, Baha Mar’s president, recently disclosed that the anticipated Canadian tourism influx has yet to occur, Sir Franklyn recalled: “I met this morning [yesterday] with a very senior Canadian banker, and he started the meeting with how the [US] tariffs are affecting The Bahamas.

“I answered that I didn’t know, but to the extent that Canadians have decided to buy places in Florida, Arizona or wherever, yet still want a warm weather destination, what’s wrong with The Bahamas? It’s an opportunity. We must stop looking at these things as if bad news is pre-ordained. Some aspects could be positive for us.

“The fact of the matter is there are possibilities. Let’s look for the possibilities. I am not into doom and gloom. Let’s look for the positives. In every one of these things, by and large, there is some goods news.” 

The Bahamas’ position on the proposed Chinese-made ship fees was echoed yesterday by the wider region. The CARICOM Private Sector Organisation (CPSO), in its submission to the US Trade Representative’s Office, described the consequences as “unthinkable” for both businesses and consumers given that US goods account for 43 percent of the region’s imports - a share likely even larger in The Bahamas.

“The proposal by the US Trade Representative to impose fees on Chinese-built ships, Chinese vessel operators and ship operators seeking to complete ship/vessel construction at Chinese shipyards, has raised enormous concerns for the CARICOM regional private sector on account of the far-reaching devastating implications for the cost of food imports [and] intermediate imports critical to the industrial sector, such as milling, brewing, animal feed consumer products etc,” the CPSO said.

“Further, the implications for the private sector, the citizenry of CARICOM and for member states could be devastating, raising the cost of imports to astronomical levels, crippling economic activity and devastating vulnerable groupings in our region. Indeed, the social and economic ramifications of and such measures by the United States is unthinkable. The implications for the cruise line sector will also be significant.” 

The Caribbean Shipowners Association (CSO), whose members include Tropical Shipping, warned that implementing the proposed fee as suggested “would impose unsustainable economic burdens” on the industry, Caribbean economies and their residents.

“The proposal would have a near crippling effect on the CSO members. Although certain aspects of the proposal are somewhat ambiguous and open to various interpretations, the CSO understands the proposal to be that a Chinese-built vessel would be subject to a fee of $1m each time it calls at a US port, and that non-Chinese-built vessels would be subject to a fee of between $500,000 and $1m each time they call at a US port if the operator of that vessel has Chinese-built vessels in its fleet,” the CSO said.

“The CSO members collectively have 69 vessel calls at US ports in the typical week. This means that the aggregate fees payable by the CSO members could be as high as $69m per week, or $3.588bn per year. That figure is more than five times’ the total gross revenue of the CSO members.. during 2024. It is self-evident that this enormous cost cannot be absorbed by the CSO members.

“Accordingly, if the proposal is implemented as drafted, the CSO members are faced with the choice of going out of business, passing the increased cost on to their customers, and/or radically changing the way they do business. None of these options are good for the customers of the CSO members, the US consumer, US labour or the US economy.”

Breaking down the impact of these fees, the CSO added: “If a vessel with a capacity of 1,000 TEUs [twenty-foot equivalent units] is required to pay a fee of $1m, that equates to a cost of $1,000 per TEU that the CSO member would need to pass on to the customer. For smaller vessels, the cost per TEU would be much higher - $2,000 per TEU for containers moving on a 500 TEU vessel.

“To put this into perspective, during calendar year 2024 the average gross revenue per TEU of the CSO members across all cargo, inbound and outbound, was approximately $2,650 per TEU. An additional charge of $1,000 per TEU would be equivalent to an almost 38 percent increase in cost for the average customer.

“The customers of the CSO members are not in a position to absorb an increase of 38 percent in the cost of the same the transportation they receive today. They would need to pass that cost on to their customers or cease exporting,” the CSO continued.

“A significant portion of the export cargo carried by the CSO members is destined for hotels, resorts and cruise ship providers serving the Caribbean. If the cost of transporting US exports goes up, the cost of hotel/resort stays, meals and Caribbean cruises will go up, negatively impacting the millions of US citizens who take cruises or vacations in the Caribbean.”