US trade policy has evolved into a de facto Caribbean investment policy, with nearly 90% of planned investments in the subregion relying on American buyers, visitors, or clients. This means that changes to market access terms don't just affect export costs but directly alter investment returns. For instance, Jamaica sends approximately 61% of its merchandise exports to the United States, and over 60% of its remittance inflows, totaling more than $2.6 billion last year, originate there. The average effective tariff rate on Jamaican goods entering the US, which was 0.05% across 2024, surged to 6.3% in January and February 2026, marking a hundredfold increase in market access costs.
The shift in US policy followed a February 20, 2026, Supreme Court ruling that the International Emergency Economic Powers Act does not authorize tariffs, leading to Section 301 becoming the primary instrument for trade investigations, focusing on forced labor prohibitions. Trinidad and Tobago, after engaging in technical discussions and passing legislation prohibiting forced labor imports, saw its tariff rate reduced from 15% in August 2025 to 10%. Jamaica, not being among the 60 economies investigated, initially held an advantage but faces uncertainty as its absence from the list doesn't guarantee exemption from future tariffs.
Beyond tariffs, Caribbean nations face other pressures. A 1% federal tax was imposed on remittances to Jamaica earlier this year, with concerns about potential increases to 25% or complete disallowance. Federal taxes on airline tickets to the US, currently around $65, could also rise, significantly impacting the tourism industry, which relies on the US for 70% of its visitors. Additionally, more onerous visa requirements and high bond requirements for Caribbean businesspeople traveling to the US increase the cost of doing business. These factors collectively push Caribbean countries to diversify trade relationships and increase intra-regional sourcing.
