The ripple effect of the US port workers strike on Trinidad and Tobago's economy.

The possible economic effects of the 2024 US port workers strike on Trinidad and Tobago

The 2024 US port workers strike involves over 45,000 members of the International Longshoremen’s Association (ILA), affecting 36 ports across the East and Gulf Coasts. These ports handle around 43% to 49% of all US imports, and the strike has the potential to disrupt global supply chains, including those in the Caribbean.

For Trinidad and Tobago, a small island nation with significant trade ties to the US, the strike poses serious risks to its economy, particularly in key industries like energy, manufacturing, and retail.

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Background: US-Trinidad and Tobago trade relations

The United States is one of Trinidad and Tobago’s primary trading partners, especially in terms of imports. The nation’s exports to the US largely consist of energy products, while imports from the US include machinery, food products, medicine and consumer goods. Any disruption in US port operations is likely to affect both import and export activities, creating ripple effects in Trinidad and Tobago’s economy.

According to trade data, around US$8.9 billion in goods are exchanged annually between the US and Trinidad and Tobago. With US ports managing a significant share of this trade, the strike threatens to delay shipments and reduce the availability of essential goods, leading to supply chain challenges for manufacturers and retailers.

Direct economic impact on Trinidad and Tobago

Disruption in imports and exports

Imports: Trinidad and Tobago imports US$3.5 billion of goods from the US (2022), especially for food items, medical supplies, and industrial equipment. With ports along the East Coast and Gulf Coast effectively shut down, the nation will face delays in receiving essential goods.

In particular, delays in food imports could lead to price inflation, particularly for perishables such as meat, vegetables, and fruits. For instance, bananas, of which 25% of US imports pass through strike-affected ports, may become harder to source for local consumers.

Exports: On the export side, US$5.4 billion of goods is exported to the United States (2022), Trinidad and Tobago is a significant supplier of liquefied natural gas (LNG) to the US Any disruption in US port activities could impede the flow of LNG and petrochemical products, reducing revenue from the energy sector, a cornerstone of Trinidad and Tobago’s economy. As a global energy player, the inability to export at usual capacity may lead to stockpiles, price drops, and possible production cuts.

Increased costs for businesses

The delay or complete halt of shipments will force businesses to look for alternative shipping routes, likely through West Coast ports or South American counterparts. This shift in logistics could increase operational costs, adding expenses related to shipping fees, warehousing, and supply chain rerouting. Manufacturers that depend on US raw materials will experience production delays and could face penalties for late delivery to their clients, affecting their bottom line.

Inflationary pressures

As perishable goods become scarce, consumers may experience rising food prices. Businesses dependent on US imports could pass the increased logistics costs onto consumers, contributing to inflation. Trinidad and Tobago’s current inflation rate of approximately 7.4% may see a further upward spike, affecting consumer purchasing power and increasing pressure on low-income households. Inflationary impacts could hit the retail sector hardest, as prices for imported goods like electronics, machinery, and textiles will likely soar.

Energy sector implications

Trinidad and Tobago’s economy is heavily reliant on the energy sector, and the US is a key market for its energy exports, particularly LNG and petrochemicals. The US port strike can lead to delays in these exports, disrupting revenue flows for state-owned energy firms like Paria Fuel Trading, Heritage Petroleum and NGC.

Additionally, the inability to ship these products on time may create contractual penalties or push customers to find alternative suppliers, reducing Trinidad and Tobago’s market share in the US energy market.

Secondary economic impact

Tourism and travel

The strike may also impact tourism, a crucial sector for Trinidad and Tobago. With the US being a significant source of tourists, delays in cargo may extend to delays in essential tourism-related imports, such as food supplies for resorts, hotel equipment, and transportation goods. This could lead to reduced service quality and decreased tourist satisfaction, further affecting the tourism industry, which is just recovering post-COVID-19.

Impact on small businesses

Many small businesses in Trinidad and Tobago rely on US imports for inventory, particularly those dealing with consumer goods, electronics, and apparel. These businesses could face inventory shortages, increased import costs, and delays in replenishing stock, leading to a slowdown in sales.

Additionally, smaller businesses may struggle more with absorbing the higher costs of alternate shipping routes compared to larger enterprises, potentially forcing some to temporarily close or reduce operations.

Potential labour unrest

Just as labour disputes in the US have led to the strike, the disruption of supply chains and rising inflation in Trinidad and Tobago could lead to unrest among local workers. There may be calls for higher wages to keep up with the increased cost of living, adding pressure on businesses already dealing with supply chain disruptions.

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Long-term economic consequences

Loss of market share in energy exports

Prolonged disruptions could weaken Trinidad and Tobago’s position as a major energy supplier to the US, particularly if US importers seek alternative suppliers during the strike. This could lead to a permanent loss of market share in the global LNG and petrochemical markets, harming the country’s long-term revenue from these exports.

Diversification and resilience building

The ongoing strike highlights the need for Trinidad and Tobago to diversify its trade partnerships and supply chains. Heavy reliance on the US as both an import and export market leaves the nation vulnerable to external shocks. In the long term, Trinidad and Tobago may explore stronger trade relationships with Latin American, European, and Asian markets to reduce this reliance.

Potential shifts in US trade policy

The strike may prompt US policymakers to reconsider their trade and labour practices, particularly concerning automation and port labour dynamics. Trinidad and Tobago must remain flexible to any changes in US trade policies, as shifts in tariffs, trade agreements, or labour laws could further impact the flow of goods between the two nations.

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Recommendations

In light of the economic challenges posed by the 2024 US port workers strike, residents of Trinidad and Tobago can take proactive measures to mitigate the impact on their personal finances, lifestyle, and overall economic well-being. Here are some key recommendations:

1. Budget wisely and prioritise spending

Monitor price increases: With inflationary pressures expected on imported goods like food, electronics, and consumer products, residents should closely track price changes. Prioritise spending on essential items like food, utilities, and healthcare while limiting purchases of non-essentials.

Create a buffer: Households should consider setting aside emergency funds, especially as prices on staples may fluctuate. Creating a financial cushion can help manage sudden increases in living costs due to inflation.

Stock up on essentials: If possible, buy in bulk for essential items such as non-perishable food, household supplies, and medications before prices rise further due to supply shortages. However, avoid panic buying or hoarding, which can exacerbate shortages.

2. Support local businesses and products

Buy local: Supporting locally made products can reduce reliance on imported goods, particularly those affected by the US port strike. Opt for locally sourced produce, clothing, and household items. This also boosts the local economy by keeping money within the country.

Explore alternative markets: Residents should seek out alternatives from other regions like Latin America, Europe, or Asia for imported goods that may become scarce or more expensive due to delays in shipments from the US.

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3. Consider alternative energy sources

Energy efficiency: Given the potential impact on the energy sector, residents should explore energy-saving habits and consider small-scale renewable energy solutions, such as solar panels, to reduce dependency on the national grid. Energy prices could rise if the strike disrupts energy exports and imports.

Fuel efficiency: As fuel prices may fluctuate due to export disruptions, residents should focus on using fuel-efficient transportation options, carpooling, or using public transport to manage costs.

4. Prepare for potential supply chain disruptions

Diversify suppliers: If running a business or household, residents should consider sourcing goods from multiple suppliers, especially those located outside the US. Exploring markets in neighbouring Caribbean or South American countries can reduce risks associated with supply chain disruptions.

Anticipate delays: Delays in shipping, especially for imported goods, may become common during the strike. Be prepared for longer waiting times for orders and plan ahead for any time-sensitive purchases or imports.

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5. Focus on home-grown food production

Start small-scale farming: Residents with access to land or even small spaces can consider home gardening or farming to reduce dependence on imported food. Growing fruits, vegetables, and herbs can provide a sustainable source of fresh produce while mitigating rising food costs.

Community farming initiatives: Participating in community-based agricultural projects or supporting local farmers can help strengthen food security during this time of uncertainty.

6. Stay informed and adapt to changes

Keep updated on trade and economic news: Residents should stay informed about developments in the US port strike and how it affects Trinidad and Tobago’s economy. Being aware of potential changes can help residents make timely decisions regarding purchases, investments, and budgeting.

Adapt to potential shortages: If certain goods become scarce or unaffordable, residents should be flexible and open to substitute products or services. For example, opting for local ingredients in cooking instead of imported ones can ease the pressure on household expenses.

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7. Seek financial advice and support

Consult with financial experts: Those feeling the economic strain can consider consulting with financial planners or advisors on how to manage their savings, investments, and debt during a period of rising costs and potential economic volatility.

Look for government support: If the situation worsens, residents should stay informed about any government programs or subsidies designed to assist with rising living costs, especially for low-income households.

8. Explore e-commerce and remote work opportunities

Leverage online markets: Residents who run small businesses may consider using e-commerce platforms to reach new markets beyond the US, particularly in regions less affected by the strike. Diversifying customer bases can help sustain sales during supply chain disruptions.

Consider remote work: The global trend toward remote work provides an opportunity to access jobs outside the Caribbean. Residents skilled in technology, finance, marketing, or customer service can explore remote positions with companies in regions not heavily impacted by the US strike.

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Conclusion

Residents of Trinidad and Tobago can take practical steps to navigate the economic impact of the 2024 US port workers strike. By prioritising spending, supporting local production, adopting energy-efficient habits, and staying informed, individuals and households can mitigate the worst effects of supply chain disruptions and price inflation. Planning ahead, diversifying sources of goods, and embracing a more self-sufficient lifestyle are key strategies to weather the potential economic storm.

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