Q COSTARICA — An executive order signed by U.S. President Donald Trump on July 31 will increase import tariffs by 15%, from the previously announced rate of 10%, on products from Costa Rica, a decision that is part of a strategy by Washington, marked by trade protectionism and the review of multilateral agreements.
Furthermore, tariffs on Canadian products will rise further, from 25% to 35%, while Mexico has obtained a 90-day extension to negotiate a bilateral agreement.
In Costa Rica, the announcement has raised alarms among export sectors, which warn of adverse effects on the competitiveness of key products such as coffee, pineapple, textiles, and medical devices, amid an already challenging global market.
At the diplomatic level, the Costa Rican government is evaluating the implications and possible response measures, given the risk of losing preferential access and increasing shipping costs to the country’s main trading partner.
Roxana Morales, coordinator of the Economic and Social Observatory at the School of Economics of the National University (UNA), explained the potential impact this measure could have on the national economy, especially considering it is the most important market for Costa Rican exports.
“The United States has announced an increase in tariffs on several countries around the world, including Costa Rica. In our case, it will go from 10% to 15%. What does this mean? Now, our products will pay a tax in the United States of 15% of the value of our sales,” Morales explained.
Although the burden will be borne primarily by American consumers, there could also be an impact on domestic producers, she warned.
Negative Consequences
The main consequence, Morales indicated, is the loss of competitiveness of Costa Rican products, which would translate into a possible reduction in exports.
“If our products become more expensive for Americans, they in the United States may prefer to buy the same or similar products from other companies in other countries or within the same country,” she noted.
This could have a direct impact on national production and, consequently, on employment, both in the free trade zones and the definitive regime.
But the impact is not limited to the export of goods.
Morales warned of indirect effects on sectors such as tourism and foreign investment.
In the case of tourism, she noted that the majority of visitors come from the United States.
“If there is an increase in prices in the United States due to the tariffs it is applying to various products around the world, then Americans will have a reduced ability to travel,” she warned.
Morales also expressed concern about the potential impact this could have on Foreign Direct Investment (FDI), given that the United States is the main source of this type of capital in Costa Rica. A loss of competitiveness could make the country less attractive for new investment.
“The Costa Rican government has begun negotiations with the United States to reduce or eliminate these tariffs on some products. However, no agreement has yet been reached,” he commented. As planned, the tariff increase would take effect on August 7.
The surprising decision to increase from a 10% to 15% tariff on imports from Costa Rica, has also raised alarm among domestic exporters grouped in the Costa Rican Chamber of Foreign Trade and Representatives of Foreign Companies (CRECEX).
“This measure deeply concerns us, but we are confident that the negotiating team from the Ministry of Foreign Trade (COMEX) will make significant progress in the ongoing talks with U.S. authorities,” CRECEX said in a statement.
The executive order signed by Trump also eliminates a policy that allowed for tax exemptions for small packages, i.e., merchandise under US$800 sent by mail, which will directly impact thousands of small international transactions. The elimination of this exemption will take effect on August 29.
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