MIDA describes tariffs as self-inflicted blow
- The San Juan Daily Star
- Apr 4
- 4 min read
By The Star Staff
Manuel Reyes Alfonso, the executive vice president of the Food Marketing, Industry and Distribution Chamber (MIDA by its acronym in Spanish), described the global tariffs imposed by President Donald Trump on Wednesday as a “self-inflicted blow” and urged consumers to save money.
“The economy was growing and inflation was falling, so this is a self-inflicted blow that’s hard to explain and difficult to accept,” Reyes said in a radio interview. “In the case of Puerto Rico, it will have significant impacts. It’s challenging to determine the extent of the impact because businesses are now reassessing where they source their supplies and which tariffs apply to those countries. We need to see if there are exceptions for specific products, as the tariffs are general.”
Trump on Wednesday afternoon announced a sweeping tariff plan that went beyond what most analysts anticipated. The plan imposes a universal baseline tariff of 10% on all imports and higher tariffs on 60 countries with which the United States has significant trade deficits. The executive order signed by Trump specifically gives him the ability to reduce tariffs if a country negotiates or takes other steps to reduce its trade barriers.
Markets reacted negatively, with overnight futures sharply down following three days of gains.
Reyes highlighted that the tariffs have created considerable uncertainty for entrepreneurs on the island regarding the future of their businesses.
“Right now, companies are uncertain; they don’t know what to expect,” he said. “The process of establishing a manufacturing business takes years of planning, so with so much uncertainty, moving forward will be complicated. This shift is necessary, and while there are opportunities, it remains a complex situation.”
The MIDA vice president advised consumers to save money wherever they can during this uncertain period.
“Now is the time to save. Those who can should avoid excessive or luxury spending while we figure out what the future holds,” Reyes said. “Concerning local government issues, this is a critical moment to make the decisions we’ve been procrastinating on for decades, decisions we know are necessary.”
Trump’s announcement launches an economic experiment not seen in nearly a century, one which most economists believe will spark a global trade war and result in higher prices, slower growth and rising inflation, but which the White House believes will fundamentally reshape the U.S. economy with ultimately positive results.
In Puerto Rico, according to San Juan-based economic think tank Estudios Técnicos, the share of merchandise imports from foreign countries has decreased, while the share of imports from the U.S. has increased, reflecting the tariff increases imposed by the U.S. on Chinese and European products after 2018. Due to complex and highly integrated global supply chains, finished and intermediate goods imported from the U.S. already reflect the impact of the 25% tariffs previously imposed on Mexico and Canada, 20% on China, and 10% on aluminum and steel.
One positive note, albeit temporary, is that pharmaceutical products were exempt from the new tariffs, which should bring relief to the industry in Puerto Rico. However, this may be a temporary policy, as press reports have indicated that the administration is still seeking to establish tariffs targeting pharmaceutical products. The postponement is intended to give the industry time to relocate its manufacturing. This could represent an opportunity for Puerto Rico. The potential impact of the tariffs on the industry would be significant, as many U.S. companies manufacture their active ingredients primarily in Europe, which is the case in Puerto Rico.
Imports of oil, gas, and refined products were exempt from the tariffs, which is a relief for the island’s consumers. However, inflation is expected in food products, as 41% of agricultural products are obtained directly from foreign countries and an additional percentage passes through the U.S. A positive side effect is that the tariffs could encourage local production of agricultural products and food manufacturing.
The 25% tariff on foreign-made cars and trucks will likely increase consumer prices by several thousand dollars per vehicle, depending on the proportion of non-U.S.-made components. The tariffs could boost short-term demand for available inventories, but once prices reflect the impact of the tariffs, sales are expected to continue to decline, exceeding a previously expected 6% drop for the year.
Gov. Jenniffer González Colón pointed out on Thursday that “[t]his means that people have the option of buying American cars.”
“That’s the first answer,” she said at a press conference. “If your car is imported from a country that is subject to these more expensive tariffs, buy an American one because it’s cheaper.”
Although some or all of the tariff measures could be reduced or rescinded during ongoing negotiations, current signs of economic strain in the U.S. suggest that prolonged trade tensions could weaken consumer confidence and spending and hamper global trade, Estudios Técnicos noted.
Regarding the impact of tariffs on parts for any domestic or industrial equipment, González Colón expressed her concern about those needed for the electrical system and manufacturing.
“What does concern me are, for example, these types of products that are needed to repair a generating plant or equipment that Puerto Rico depends on for a pharmaceutical or local manufacturing industry.” the governor said. “That’s why this review must be conducted industry by industry. The Department of Economic Development is doing this with the entire pharmaceutical industry, looking at the importation of many of these products -- raw material, base equipment -- that are imported and value-added in Puerto Rico. Thank God, biopharmaceutical products, which are the largest import burden Puerto Rico faces, are exempt from these duties, from these tariffs.”
But, honestly, in order to speak responsibly, we have to see what the impact will be,” González Colón said. “Because I also know that the White House is negotiating directly with many of these countries now that the tariffs are in effect, to negotiate and exclude them. That is, ultimately, the president’s goal.”
She reiterated she will take advantage of the opportunity to seek manufacturing companies to relocate to Puerto Rico.
“And we’re focusing exclusively on the biopharmaceutical, medical technology, aerospace, defense, FDA-compliant infrastructure manufacturing, and workforce capabilities,” the governor said. “Because, by taking these tariffs, we’re looking to leverage that to bring that here. And we’ve already communicated with the White House, because we know that, as part of this imposition of tariffs, the president’s economic team is holding meetings with all the companies that will be impacted.”
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