A global tariff war involving Belize’s three largest trading partners— the U.S., China, and Mexico— is likely to raise consumer prices locally; the government could offset impacts by reducing customs duties but that would negatively impact government revenues, says economist Dr. Philip Castillo.
Dr. Castillo, an economics lecturer at the University of Belize, noted that if the tariff war extends to the European Union, it would encompass nearly all of Belize’s trading partners except for CARICOM and Central America.
“The traditional effects of a tariff war are increased consumer prices as costs are generally forwarded to consumers,” he said, adding that such effects could be felt in Belize.
To the point on the customs-duties offset, it is worth noting that almost 17% of the tax revenue is attributable to taxes on international trade.
Trade tensions escalated after the U.S. imposed 25% tariffs on Mexican and Canadian goods, as well as additional levies on Chinese imports. Canada immediately responded with 25% tariffs on over $100 billion worth of U.S. goods, while Mexico announced retaliatory tariffs set to take effect this month.
The impact on Belize could be significant, as its economy depends heavily on imported goods from these regions. The latest data from the Statistical Institute of Belize (SIB) shows that inflation is already being driven by rising food, housing, and transport costs. Since October 2020, food prices alone have surged by more than 34%, and January’s inflation rate stood at 2.2% year-over-year.
According to global shipping giant Maersk, tariffs will inevitably fuel inflationary pressures in the U.S., which could, in turn, affect smaller economies reliant on American imports. Business groups, including the U.S. Chamber of Commerce and major retailers, have warned that price hikes will be passed down the supply chain.
Belize’s inflation is closely tied to trends in the U.S., where rising input costs, supply chain constraints, and wage pressures are pushing up consumer prices. Recent U.S. trade policy moves have also heightened concerns, as businesses brace for increased costs on goods ranging from agricultural products to industrial materials.
Dr. Castillo pointed out, however, that the precise impact in Belize is unclear as it is a bit too early to tell.