By Workers’ Socialist Movement (MST), IWU-FI section in the Dominican Republic
On April 2nd, US President Donald Trump announced an across-the-board increase in US import tariffs. This means that the US will charge higher duties on goods entering the US. The announcement was made under the false claim that it was an exercise in ‘reciprocity’, i.e. balancing US import taxes with those applied by other countries on imports from the US. But Trump’s tariffs bear no relation to those applied by third parties to the US, rather they have been calculated to try to eliminate the US trade deficit, in other words, the fact that the US imports more than it exports. Specifically, Trump is using these tariffs to extort political and economic concessions from the countries with which he trades, including his allies and subordinates, such as the regime in the Dominican Republic, in order to negotiate and extract political and economic concessions from them.
Trump’s announcement has already led to a generalised fall in the stock markets, and according to some estimates, if this policy is sustained, it would lead to a fall in US and world economic growth, in addition to its impact on US inflation, possibly generating a recession in the US.
Trump’s tariffs are not based on the tariffs levied on US imports into third countries, but on the size of the US trade deficit with those countries, applying a 10% tariff to countries with which the US has a trade surplus (to which it exports more than it imports). Many analysts believe that Trump’s tariffs will not serve that purpose, and even the increase in customs tax collections will be offset by the slowdown in the economy and a drop in other taxes collected. In the case of the Dominican Republic, a 10% tariff is applied, since the US has a large trade surplus with our country. The Dominican Republic does not charge a tariff on US imports, as both countries are part of the CAFTA-DR (Dominican Republic–Central America–United States Free Trade Agreement) free trade agreement, which eliminates almost all tariffs, with a few exceptions. Ironically, the only Dominican export that will now benefit from preferential tariffs will be sugar produced with forced labour, after Trump removed the sanction established in 2022 on the US-owned Central Romana, demonstrating the complicity of Trump and Abinader with the most terrible violations of labour rights of the sugar cane workers.
Demonstrating unlimited servility, the right-wing and pro-imperialist PRM (Partido Revolucionario Moderno) government has said that the 10% tariff can benefit the Dominican Republic, because it places us in the group of countries with the lowest tariffs applied by Trump. The ultra-right, which speaks of sovereignty only to stir up racial hatred against Haitian workers, has said nothing against Trump’s economic attack on our country. It should be remembered that, despite calling themselves ‘nationalists’, neo-fascist influencers are accustomed to wearing the Trump campaign cap with the slogan MAGA (Make America Great Again) and that during the US election campaign the neo-Nazis of the AOD (Antigua Orden Dominicana) held an event in La Romana with Trump flags. The same people who are emboldened when they are part of anti-Haitian lynch mobs are cowardly and submissive before their US masters.
Clearly Trump’s measures will not benefit the Dominican Republic, as Abinader believes. The likely recession in the US and the rising cost of living in that country will substantially reduce remittances sent by the Dominican diaspora, one of the main sources of foreign currency in our economy; tourism from that country will also decrease. The US economic contraction and the increase in the cost of imports from our country will lead to a decrease in US demand for products manufactured in the Dominican free trade zones and some agricultural products. This will most likely further increase the Dominican trade deficit with the US.
There are indications that Trump is using tariff extortion to bilaterally renegotiate in his favour the conditions under which he conducts trade with all countries. In this sense, it would be urgent for the Dominican government to take measures of elementary self-defence, such as denouncing the violation and de facto liquidation of the free trade agreement by the US, abandoning CAFTA-DR and applying tariffs to the US equivalent to those applied by Trump. CAFTA-DR has always been an instrument of domination and subordination at the service of the US, and now more than ever it is necessary to get out of it, as it makes no sense to free gringo products from tariffs while the US charges tariffs of 10% on Dominican products. The agreement with the US on the exploitation of rare earths in Pedernales, which is detrimental to national sovereignty, must be cancelled immediately. Similarly, seeking to negotiate as a bloc with the USA, together with other Latin American and Caribbean countries, and propose non-payment of the foreign debt, among other economic and political measures to defend ourselves against the trade war launched by Yankee imperialism and the probable consequences of a world economic slowdown or, worse, a recession.
Unfortunately, the Abinader government, like the pseudo-nationalist ultra-right, is totally subservient to Trump and incapable of adopting a minimally dignified and serious position in the face of the serious offensive of imperialism and the looming crisis. We must prepare to defend on the streets that the cost of the crisis is not dumped on the shoulders of the working people again, as happened during the crisis precipitated by the Covid-19 pandemic.
