How Guam can leverage US tariffs

 By Jayvee Vallejera

The sweeping tariffs the Trump administration has imposed on many products imported to the United States set Guam up as the sweet spot for manufacturing and tariff-free exports to the U.S. mainland, according to Sen. William A. Parkinson.

Parkinson, who just introduced a yet-to-be-docketed bill to create the Guam Tariff Advantage Development Act, sees President Donald Trump’s tariffs as a silver lining that Guam could take advantage of because of its unique tariff-exempt status.

The bill states that Guam’s unique political status gives it a substantial economic advantage, enabling manufacturers to bring materials to Guam duty-free, add and transform them locally, and then export the end-products duty-free into the U.S. mainland.

“Recent tariff impositions by the United States on imported goods create economic opportunities for Guam to become a strategic manufacturing and distribution hub, circumventing such tariffs lawfully and competitively,” states part of Parkinson’s bill.

It also states this will set up Guam as a primary hub in the Asia-Pacific region for tariff-free importation, manufacturing, assembly, and reexportation to the U.S. mainland.

The proposed Guam Tariff Advantage Development Act, which would create tariff advantage zones, is designed to attract manufacturing enterprises, foster economic diversification, reduce reliance on tourism and federal defense expenditures, and create high-quality jobs for residents, Parkinson’s bill said.

Under the bill, manufacturers would set up shop in Guam, import the materials they would need to create their products, and then transform raw materials into finished products for eventual sale to the U.S. mainland, allowing them to avoid the tariffs.

Among the foreign and domestic investors it seeks to attract are companies that will enhance the island’s manufacturing, assembly and logistics sectors.

These companies would be located within designated Tariff Advantage Zones on Guam and would have streamlined customs procedures and dedicated infrastructure to ease the importation, assembly, storage and reexportation processes.

These zones would have warehouses, customs processing facilities, advanced security measures and utility support, and could connect to airports and ports.

To further entice these companies to set up shop in Guam, they would also be granted other tax benefits--on top of tax-free importation of products-- such as a percentage of tax rebates for a fixed period of years and expedited permitting and regulatory approvals.

President Trump’s administration imposed sweeping tariffs on many imports to the United States on April 2, describing it as America’s Liberation Day and defending the move as a means to boost domestic manufacturing.

Critics, however, criticized it as a tax hike that could push the U.S. and many other countries into a recession and will mean higher prices for homes, automobiles and clothes.

Others say the new tariff policy might disrupt world order and launch a trade war, with many countries promising to impose retaliatory tariffs on American products. It has also strained the United States’ relations with allies and trading partners, most notably with Canada and the European Union.