Fiji may evade substantial impact from U.S. tariffs due to its minimal trade size, yet it could still face implications from VAT-related tariff measures. Economist Justin Smirk highlights that, although Fiji’s exports to the U.S. are small, the VAT system could lead to reciprocal tariffs. Nevertheless, small economies may benefit from global market adjustments stemming from these tariffs.
As global trade prepares for the consequences of impending tariff measures introduced by U.S. President Donald Trump, Fiji’s small size and limited trade volume may allow it to remain unnoticed. However, Westpac director and senior economist Justin Smirk warns that Fiji could still be impacted due to its implementation of Value Added Tax (VAT).
Mr. Smirk stated, “If you’re thinking about your exports to the US, you know that your exports in the US to Fiji are quite small. So you know there’s not going to be a direct hit. You can probably sail under the radar.”
Despite Fiji’s small stature, the U.S. is looking into reciprocal tariffs that could affect all countries with VAT systems. Smirk elaborated, stating that VAT applies to all consumed goods, including imports, creating a scenario where the U.S. perceives this as a subsidy for exports, which could result in tariffs on countries like Fiji.
Although it remains uncertain how U.S. tariffs will affect individual nations, Smirk discussed potential benefits for small, open economies like Fiji amidst tariff initiatives that may arise globally. He explained that while tariffs typically introduce inflationary pressures, they may also lead to overproduction, creating surplus consumer goods available internationally.
“There’ll be ample load of supply of them and they’re going to be a counter factor to the tariff,” Mr. Smirk noted. He emphasized that smaller economies that facilitate imports stand to benefit amidst the economic fluctuations prompted by larger countries’ tariff implementations.
In summary, while Fiji may initially seem insulated from the impact of U.S. tariffs due to its small trade volume, it is nonetheless at risk due to its VAT system. The potential for reciprocal tariffs poses a challenge, but small economies could find avenues for economic advantage amidst the shifting landscape of global trade. Observing these developments will be crucial in the coming months.
Original Source: www.fijitimes.com.fj
