The ongoing trade conflict between the United States and China is impacting Costa Rica's export-reliant economy. Recently, the U.S. imposed a 145% tariff on imports from China, Hong Kong, and Macao, citing systemic trade imbalances. In response, China imposed a 34% tariff on U.S. imports and placed restrictions on rare earth minerals, while also filing a complaint with the World Trade Organization.
Costa Rica, which relies on the U.S. for 47% of its $9.4 billion in annual exports, is facing a 10% U.S. tariff on its goods starting April 5, 2025. This affects sectors such as medical devices, coffee, and pineapples. Economists express concerns over reduced U.S. demand, noting potential negative economic growth and modest exchange rate increases due to lower export revenues. Additionally, a 25% U.S. tariff on foreign-made cars could increase shipping costs, impacting Costa Rica's logistics sector.
The Costa Rican Chamber of Foreign Trade (CRECEX) observes a potential benefit, stating, "Costa Rica benefits from a more level global playing field, as a 90-day suspension of higher tariffs on most countries—except China—temporarily standardizes competition." Costa Rica's 10% tariff offers a competitive advantage over Asian exporters facing higher duties.
The Costa Rican government is engaging in dialogue with U.S. partners to enhance market access conditions, leveraging the CAFTA-DR agreement. Efforts are underway to diversify trade with the EU, Asia, and Latin America, building on existing agreements with Singapore and Chile.
Source: The Tico Times