Consumers on Guam should brace for rising prices on many goods and services.
It’s just a matter of how much and how soon, according to local officials and business leaders.
The sweeping tariff increases announced on Thursday by President Donald J. Trump “will adversely affect Guam residents in a number of ways,” said Gary Hiles, chief economist at the Guam Department of Labor.
“The impact of these immediate, large and worldwide tariffs is quite a shock to the affected economies,” he said.
Hiles said consumer prices will rise on Guam, but the timing will vary.
“Some prices could increase immediately, but most of the price impacts for consumers are likely to be delayed as the just-imported goods move through the distribution process and are later available for retail sale,” he said.
“Fresh fruits and vegetables may be among the first to include tariff price increases,” Hiles added.
According to a White House fact sheet, Trump invoked the 1977 International Emergency Economic Powers Act to “address the national emergency posed by the large and persistent trade deficit that is driven by the absence of reciprocity in our trade relationships.”
The baseline 10% tariff on all countries took effect at 2 p.m. on April 5, Chamorro Standard Time.
Higher, individualized tariff hikes on countries with which the United States has the largest trade deficits will take effect at 2 p.m. on April 9.
For example, the tariff on China, one of the United States’ top three trading partners, will be 34%, according to a White House listing.
Kathy Calvo, president of Pay-Less Markets, said, “Despite sourcing the vast majority of our products from the U.S., we are still deeply concerned about the impact of sweeping tariffs on imported goods.”
She said 30% of Pay-Less produce comes from Mexico. Pork is imported from Ireland, beef comes from Australia and New Zealand and seafood is sourced from Asia.
“At this stage, we are closely monitoring developments, but the uncertainty surrounding these tariffs makes it challenging to plan for the future,” Calvo said.
The Guam Chamber of Commerce will also be keeping a close watch on the impact of the tariffs.
Board Chairman Tae Oh said that while Guam, as an unincorporated territory, is exempt from tariffs on goods shipped directly from Asian countries, consumers should expect higher prices on certain goods from the United States.
“Many goods that are first imported into the U.S. mainland before being transshipped to Guam, like Mexican or Canadian goods, will probably experience price increases, as tariffs would be applied at the initial port of entry into the U.S.,” he said.
“Affected categories are expected to include automotive parts, agricultural produce, dairy products, lumber and cement,” Oh said.
At least one local auto dealership said tariffs on its Japanese-made vehicles will not affect prices.
Arnel Bonto, Nissan Guam president and CEO, said, “Tariffs would only apply to foreign-built vehicles if those vehicles transit to Guam via a U.S. port, and this is not the case for Nissan Guam.”
But Hiles said that over time, “more products imported to Guam from the U.S. that originated in whole or in part from other countries will have the cost of the tariffs embedded in the retail price.”
Hiles also warned that tariffs will negatively affect the stock market and investor 401(k) retirement plans.
He said there will be an inflationary effect that may lead the Federal Reserve to delay interest rate reductions, impacting housing affordability and increasing the risk of a recession in the U.S. and other nations.
Hiles also said the tariffs could have broader implications, including for Guam’s already struggling tourism industry.
“While the impact of tourism to Guam from South Korea, Japan and Taiwan is unknown,” said Hiles. “A risk exists that an adverse sentiment towards the U.S. could dampen travel, as what’s happened already with Canadian tourists cancelling their U.S. vacations.”