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04/07/25 - The CNMI Department of Commerce sees “potential upsides” on the reciprocal tariffs recently unveiled by the administration of U.S. President Donald J. Trump.
Under Trump’s tariff proposal, the United States will impose a base tariff of 10% on all foreign imports, with rates between 20% and 60% for countries and territories judged to have major tariffs on U.S. goods.
CNMI Commerce Secretary Remegio Mafnas admitted the proposed tariffs, ranging from 10% to 20% on all imports and up to 60% on Chinese goods, would largely raise costs for U.S. consumers and businesses, as foreign exporters are unlikely to absorb the full burden.
And the Northern Marianas potentially would have it worse.
“For the CNMI, a smaller and more isolated economy compared to U.S. states, this vulnerability to price shocks could be amplified. With less economic scale or diversity to cushion the impact, higher prices could hit hard, especially if tariffs disrupt trade with key Pacific partners like China or Japan, which the CNMI relies on due to its location.”
However, Mafnas said there could be a silver lining in Trump’s proposed tariffs to balance out the United States’ trade deficit with its trade partners.
“There are potential upsides. In niche export markets, the CNMI could capitalize on its U.S. territorial status, which exempts it from import tariffs when selling to the mainland. As Asian trade flows face disruption, the CNMI might position itself as a U.S.-based intermediary, processing or assembling goods with imported raw materials and exporting them tariff-free, gaining an edge over foreign competitors now facing steep tariffs.”
Additionally, she said the proposed tariffs could eventually boost local production and self-sufficiency on the part of states and U.S. territories like the CNMI.
“The rising cost of imports might spur the CNMI to expand agriculture or small-scale manufacturing to meet local demand for food and basic goods, leveraging higher import prices to make homegrown options more viable. While its small size and isolation pose hurdles, federal support—possibly fueled by tariff revenue—could help fund these initiatives,” she said.
Ambrose Bennett, a self-styled economist in the CNMI, said the local economy might be headed into direr straights due to the proposed tariffs.
“It is almost impossible to ascertain the full effects of Trump’s tariffs and his cuts in the federal workforce, but one thing is certain that devastation is headed our way in the Marianas,” he said.
Bennett, a retired teacher and former CNMI Board of Education member, said it would be a wise move for CNMI Gov. Arnold I. Palacios and CNMI Delegate Kimberlyn King-Hinds, both Republicans like Trump, to study the effects the tariffs would have on the islands’ already vulnerable economy.
“Sometimes it takes time for the full effects and reality to set in with the average citizen, which is when they start to see the rise in prices across the board and even the shortage of goods due to tariffs. It would also be good, decent, and fiduciary for the governor and our delegate to weigh in on what the CNMI can expect from the tariffs,” he said.
Meanwhile, JCT Enterprises vice president Roman “Bo” Palacios said it’s still too early to tell what is going to be affected by Trump’s proposed tariffs. JCT Enterprises runs a chain of grocery stores and a department store in the CNMI.
Saipan Shoes owner Lydia Li, for her part, said she will be adopting a wait-and-see approach as far as Trump’s proposed tariffs are concerned. Li imports majority of her store’s merchandise from China.
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Story by Mark Rabago
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