Caleb
Fotheringham, RNZ Pacific
Journalist
Guam’s unique tax situation could see it
become a transhipping hub that avoids tariffs, but a former
Guam delegate to the United States Congress does not expect
it to last long if it is exploited.
Guam sits outside
the US customs zone, which means items imported into Guam
are exempt from the tariffs that are being implemented in
the 50 states.
However, as a US territory, Guam has
avoided a tariff of its own.
“That can be used as a
way to move products into Guam to avoid tariffs,” former
delegate in the US House of Representatives Robert Underwood
said.
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“But if they then decide to tranship
them to the US, and that becomes a vehicle to avoid tariffs,
I predict the US government will shut that
down.
“There are always entrepreneurial types who try
to figure out that maybe there’s an angle that they can play
but every time this angle has been played and it doesn’t
benefit the US government, the US government comes in and
clamps down on that.”
Underwood, now chairman of the
Guam-based think tank Pacific Center for Island Security,
said the exemption is meant to benefit individual tourists
who buy luxury goods.
President Donald Trump is
lowering all “Liberation Day” tariffs to 10 percent, except
for China, whose rate has been raised to 125 percent. China
has also hit back with its own tariff of 84 percent on all
US imports.
The cost of living is already high in
Guam, and Underwood said the tariffs would make the problem
worse.
“Since we get most of our products from the US,
whatever tariffs the US has to pay will inevitably be passed
on to Guam, and that is true for produce and finished
products.”
The
US is seeing a sharp decline in its tourism numbers from
Canada, and Underwood beleives the reduction in tourists or
the “Canadian effect” will also be seen in
Guam.
“There should be some concern on Guam that as a
result of these tariffs there might be reduced travel from
Japan and South Korea to American places.
“On the
whole, the disruption on the economy is going to be pretty
dramatic.”
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