Rising geopolitical tensions threaten Trinidad and Tobago’s SMEs amid soaring shipping costs

The increasing militarisation of the southern Caribbean and global conflicts are escalating shipping costs and disrupting supply chains, posing significant risks for small and medium enterprises in Trinidad and Tobago. Industry experts call for strategic resilience to safeguard economic stability amidst global unrest.

Over recent months, the southern Caribbean has emerged as one of the most militarised regions in the Western Hemisphere, with the deployment of naval vess...

els including the USS Gerald R Ford near Trinidad and Tobago’s waters, amid escalating tensions between the United States and Venezuela. While these developments might seem distant for many, they carry significant implications for small and medium enterprises (SMEs) in Trinidad and Tobago, whose economic operations are increasingly vulnerable to geopolitical disruptions.

A personal decision by a local entrepreneur to pause a promising business venture that relied on shipping goods from Asia underscores the precarious situation facing SMEs. The entrepreneur’s concerns echo the disruption seen during the COVID-19 pandemic, when freight costs soared, shipping delays became the norm, and supply chains broke down. Global conflicts or heightened military tensions exacerbate these issues by increasing freight costs through war-risk premiums, rerouting shipments, raising marine insurance, and shaking consumer confidence, all of which impact SMEs primarily reliant on imported, non-essential goods.

SMEs contribute nearly 30 percent of Trinidad and Tobago’s GDP and represent the bulk of retail activity and employment. Yet, the sector suffers from structural weaknesses that amplify its susceptibility to global instability. Persistent foreign exchange shortages, high import dependence, thin profit margins, long supply chains, and highly price-sensitive consumers create a fragile ecosystem where even minor international disruptions can have immediate and severe consequences. This was made evident during the pandemic and is further exacerbated by the current militarisation of the Caribbean and volatility in global shipping routes.

The broader context affirms these pressures. Data shows that global shipping costs have surged due to geopolitical threats, including military conflicts, which disrupt routes, increase freight charges, and heighten insurance premiums, effects confirmed by reports from the United Nations Conference on Trade and Development and other international bodies. Similarly, the United Nations in the Caribbean highlights the dual impact of geopolitical crises and climate disruptions as factors driving up shipping costs and eroding the competitiveness of small island developing states like Trinidad and Tobago.

On the domestic front, the government’s 2025 budget statement recognises these challenges, noting the adverse effects of geopolitical tensions on the global energy market and related shipping constraints, which directly influence the sea freight costs critical to the local economy. Industry experts further stress the rising costs in the logistics sector worldwide, with supply chain spending reaching $2.58 trillion, and the imperative for businesses to build resilience through strategies such as nearshoring, supply chain diversification, and adoption of new technologies like artificial intelligence.

This evolving landscape demands urgent conversation and strategic response from Trinidad and Tobago’s SME community. With external shocks set to become more frequent, businesses must rethink traditional models that rely heavily on distant import dependencies. Diversification of business models, bolstering local and regional sourcing networks, developing hybrid digital and service-based offerings, and fostering forex-generating enterprises are prudent steps towards greater economic resilience.

The personal story of reevaluating a business plan amid rising regional military tensions serves as a timely reminder: vigilance and adaptability are crucial. It is not about fostering fear but about facing the realities of an unpredictable global environment. Preparing SMEs to withstand and navigate these challenges is essential to safeguarding the backbone of Trinidad and Tobago’s economy.

While the spectre of war may never physically reach the nation’s shores, its ripple effects are already shaping the business environment. Understanding and preparing for such geopolitical risks could be the deciding factor between survival and collapse for many local enterprises. The current moment calls for proactive strategies and a resilient mindset to ensure Trinidad and Tobago’s SMEs can thrive despite global uncertainties.

Source: Noah Wire Services