Fiji’s economic landscape may seem shielded from the impacts of impending US tariffs due to its small size and low trade volume. However, economist Justin Smirk warns that the existence of VAT could attract US tariff scrutiny. Moreover, small economies like Fiji could ultimately benefit from the larger trade shifts induced by tariffs.
As global trade anticipates repercussions from President Donald Trump’s upcoming tariff policies, Fiji is likely to remain relatively unaffected due to its small size and low trade volume. However, Westpac’s director and senior economist, Justin Smirk, has warned that Fiji could still attract attention due to its implementation of Value Added Tax (VAT) on exports.
Mr. Smirk pointed out, “If you’re thinking about your exports to the US, you know that your exports in the US to Fiji are quite small… you can probably sail under the radar.” Despite this, he highlighted the possibility of the US imposing reciprocal tariffs, particularly targeting nations that utilize VAT as it is considered a tax on imports.
The economist emphasized, “So any country with a VAT, get ready for a countering US tariff.” He elaborated that even though Fiji may not face an immediate impact, the global trade environment necessitates vigilance. With almost all countries applying VAT, it indicates that numerous nations might soon confront similar tariff challenges.
Smirk also expressed optimism, suggesting that Fiji and other small, open economies could garner benefits from the tariff-related shifts in larger economies. He posited that in a landscape where numerous countries are enacting tariffs, overproduction may arise, potentially alleviating inflation while providing diverse consumer goods that could benefit smaller nations like Fiji.
In summary, while Fiji may initially appear to evade the adverse effects of US tariffs due to its size, the potential for tariffs based on VAT introduces a significant concern. Justin Smirk’s insights on the trends amidst global trade dynamics indicate that small economies might find opportunities in the evolving market landscape. Stakeholders should remain vigilant regarding these developments and prepare for potential adjustments in trade policy.
Original Source: www.fijitimes.com.fj
