The Bahamas must shift with the times

The Bahamas, like many small island economies, finds itself at a critical crossroads where external forces threaten to disrupt the steady growth and fragile progress made since the pandemic.

The United States’ increasingly erratic tariff policy, born from its ongoing trade war with China and broader attempts to reorient global trade, now represents a direct challenge to the economic stability of nations like ours.

We have weathered storms before, but this moment demands careful, deliberate leadership if we are to navigate these turbulent waters without sacrificing the gains we have made.

Anthony Ferguson, president of CFAL, captured the heart of the matter when he warned in his company’s latest Quarterly Economic Review that these tariff shifts, especially the surprising move to impose a baseline tariff on all countries, have rattled markets and, more dangerously, undermined long-term business confidence.

It is a simple truth often overlooked by policymakers far from our shores: small economies like The Bahamas are inherently more vulnerable to sudden shocks because we do not have the luxury of massive internal markets or broad manufacturing bases to absorb global disruptions.

The primary risk Ferguson identifies – the damage to consumer and business confidence – is real and immediate.

Already, airlines have started to scale back flights as travel demand shows early signs of slowing.

Higher costs of goods, delayed investment decisions, and a shift toward consumer frugality could easily spread from the United States to our shores, especially considering the degree to which we rely on American tourists and imported goods.

The Bahamas’ heavy dependency on the US market, particularly for tourism – which remains at record highs – is both a blessing and a potential liability.

If US consumers begin to feel less secure about their finances, if businesses slow hiring or expansion, if airfare and goods prices creep higher, then Bahamian hotels, restaurants, tour operators, and retailers will feel it too.

The situation calls for a few immediate and long-term actions.

First, we must double down on diplomacy.

Quiet, consistent, well-informed advocacy in Washington, and other key global capitals, is essential.

The recent success in securing a USTR exemption for Caribbean shipping routes from devastating port fees shows that when The Bahamas and the region act collectively and strategically, we can influence outcomes that directly protect our people. We must keep our voices loud and our alliances strong.

Second, we must urgently diversify. The Bahamas cannot afford to have nearly all of its eggs in the US tourism and trade basket.

Projects like the $600 million expansion of Grand Bahama Shipyard, partly backed by cruise industry giants, offer hope for broader industrial capacity and greater economic complexity.

The shipyard’s new floating docks, capable of servicing the largest cruise ships in the world, promise to generate not only direct employment but also stimulate a range of supporting services and industries.

This kind of strategic investment in world-class infrastructure is exactly the type of forward-looking development The Bahamas needs.

Also, the budding partnership between the AfriCaribbean Trade and Logistics Consulting Group (ACTLCG) and the McDan Group in Africa is another promising signal that we are starting to think beyond traditional partners.

Building a cross-Atlantic trade network linking The Bahamas and the broader Caribbean with African markets could open new supply chains for energy, manufactured goods, and raw materials.

This would not only lessen our overreliance on North American supply lines but also build resilience against future global economic shocks.

Third, our government must move decisively and transparently in managing new tax structures like the recently implemented Domestic Minimum Top-Up Tax (DMTT).

While necessary to align with global efforts against tax base erosion, the DMTT has already eroded bank profits significantly, as seen with FINCO’s 41 percent decline in net profit for the first quarter of 2025.

Taxes must be calibrated carefully to avoid suffocating the very sectors we are depending on for economic recovery and diversification.

We are living through a time when the old certainties of trade and economics are rapidly changing.

National policies in faraway capitals can have immediate consequences on the price of groceries in New Providence, the number of tourists landing at Lynden Pindling International Airport, and the investment decisions being made in Grand Bahama, Abaco, and Eleuthera.

The Bahamas is not powerless, but neither are we invulnerable.

We must preserve the conditions that have allowed US tourist arrivals to reach record highs even as external pressures mount.

It will require deft minds and the ability to pivot quickly.