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Trump Tariffs: Guam's Exemption Could Be Short-lived, Says Former US Delegate
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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