EXPORTERS have rejected calls from US distributors to absorb the full cost of the 10 per cent tariff imposed on a wide range of Jamaican products entering the American market; but concerns are now shifting to how the added price pressure could impact sales and market share in the United States — one of their most important export destination.

“Their first request was that we absorbed the full impact,” Richard Pandohie, Group CEO of Seprod and Trinidad-based AS Bryden — two of the largest regional manufacturers and exporters of food and household items — told the
Jamaica Observer. “Our response was to ask everyone to be calm and let us see how the geopolitical situation would play out; it is still volatile and decisions are being made every week. Our discussions with our partners continue,” Pandohie added.

The approach by many local producers to stand firm in early negotiations may have shielded their balance sheets in the short term, but producers are closely monitoring the market as higher shelf prices begin to take hold.

“For export, our cost has gone up by the 10 per cent, which has been passed through by our distribution partners to the consumers,” Pandohie told the Business Observer. “Because there was stock on the ground prior to the announced tariff change, the hit on consumers was not immediate. However, this increase is now reaching the shelves, and we wait to see how this affects demand,” he explained.

The 10 per cent import duty — introduced in April under a Trump Administration executive order — is part of a sweeping overhaul targeting countries that benefit from the Caribbean Basin Initiative (CBI), a decades-old trade agreement that gave preferential access to US markets. While the Biden Administration had kept the CBI intact, President Donald Trump’s return to the White House brought a reversal. It was framed as a nationalist push to protect American manufacturing.

For Jamaica, where the US is both a top export destination and a vital source of raw materials, the implications are wide-ranging.

“USA-based manufacturers producing substitute goods will now have an additional price advantage vis-à-vis our incoming goods, so we will have to wait and see how they deploy that additional advantage,” Pandohie warned.

Seprod is in talks with US partners to explore how to protect its revenue base, and the company is also re-evaluating sourcing strategies. “We are mindful of the pricing pressure on our consumers, and the potential impact of that on our revenue and bottom line. We continue to reassess sourcing strategies and consider alternative suppliers, but it is not straightforward as our economy of scale limits us in direct sourcing sometimes — which is why companies end up buying through mega-brokers based in the USA,” said Pandohie.

Still, the most significant impact may be on producers of agricultural exports unique to Jamaica — such as ackee, mangoes, and Blue Mountain coffee — who now face higher costs that could dampen demand in the US market.

“The announcement of the 10 per cent tariff is a big concern to the Jamaica Coffee Exporters Association,” said Norman Grant who heads the industry group and also serves as CEO of Mavis Bank Coffee Factory. “Based on our exports of coffee, estimated at about US$25 million per year, 20 per cent of that goes into the USA in the form of green coffee, so you’re talking about a market that buys about US$5 million in green coffee.”

Grant explained that the US market is also growing in its appetite for roasted Jamaica Blue Mountain coffee, which could bring the total export value to around US$7 million or more than $1.1 billion. But the new tariff could derail that potential.

“A 10 per cent tariff to that market would increase the price of the coffee, or increase the cost associated with the distribution of coffee to the USA market. Already the price of Jamaica Blue Mountain coffee is expensive, with the average price per kilogramme into the USA market somewhere in the region of US$32 to US$35,” he said. “A 10 per cent tariff is about US$3.50 per kilogramme, which is about $1.60 per pound. Some coffees on the world market are selling for $1.60 to $2 a pound, so you see where I’m going…”

Grant also confirmed that distributors are pushing for coffee exporters to absorb the increase, which could shrink margins and reduce earnings for farmers and processors alike.

“This tariff is a serious issue or a barrier for the continuous growth of the USA market,” he said.

While Grant wants the Jamaican Government to engage diplomatically with Washington, he cautioned that shifting to new markets isn’t a simple solution. “It takes a lot of development and spend to develop new markets, and new markets don’t tend to buy large volumes quickly,” he said.

GraceKennedy, one of Jamaica’s largest food exporters, also acknowledged the challenge.

“There has been no significant impact on our business operations to date but, like all exporters to the US, the tariff has added 10 per cent to the landed cost of goods exported to that market,” the company stated in written responses.

To manage the increase GraceKennedy says it is leaning on sourcing efficiencies and closer collaboration with US partners. “We are partnering with our suppliers and have revised our promotions strategy to best mitigate the impact of the tariffs on our consumers,” the company said.

It added that while its US food division has been the most affected so far, it continues to monitor other areas of the business for ripple effects.

Wisynco Group, which exports beverages, has been less affected. Chairman William Mahfood said the tariff’s impact has been muted, largely because the company’s exposure to the US market is limited.

“Our juices and beverages and those things, we are not seeing any decline at this point,” Mahfood told the Business Observer. “I just think that the impact on our products is not going to be as substantive as some of the other products from other markets.”

He also noted that because the tariff is applied to US importers, Wisynco’s own prices remain unchanged. “We are selling at the same price so the end price would go to the consumer — it would just pass to the consumer,” Mahfood explained.

Nevertheless, exporters and manufacturers alike are watching how consumers respond as the increases filter through.

“Although we have had to pass on some price increase, for the most part we have cushioned the impact to our customers and consumers,” Pandohie said. “This cost absorption has impacted our revenue conversion to profit but we have been trying to mitigate by improving our productivity, reorganising our supply chain ecosystem, and seeking to grow our revenue base by expanding into new markets and channels.”

Grant, meanwhile, remains hopeful that diplomacy can help ease the burden. “We are hoping the Government can engage at the diplomatic channel to see if there is any possibility that the president’s heart can be softened as it relates to this 10 per cent tariff.”

CEO of Seprod and Trinidad-based AS Bryden Richard Pandohie says the companies have begun to feel the effects of the US tariff, with increased export costs now reaching retail shelves and pressure mounting from US-based competitors.