One step back and one step forward in boosting growth: the impact of U.S. tariffs and progress on the mine’s reopening

PANAMA - In Brief 28 Apr 2025 by Marco Fernandez

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Assessing the potential impact of U.S. tariffs on Panama’s economyThe U.S. administration suspended country-specific tariffs for 90 days starting April 9 but maintained the 10% baseline tariff on all goods and countries, including Panama. It remains unclear whether the U.S. government will ultimately reinstate country-specific tariffs, which mainly affect European and Asian countries. The looming threat of an expanded trade conflict poses considerable risks for Panama and the broader global economy. Estimating the full economic impact of the Trump administration's tariff policies remains difficult, given the administration’s inconsistent and often unpredictable approach. Nonetheless, Panama could face adverse consequences across multiple fronts. Trade flows between Panama and the United States would be among the first areas to feel the strain. In 2024, the U.S. absorbed 19.1% of Panama’s goods exports (mainly sugar, bananas, sea products and scrap). Nevertheless, the overall impact on the economy is expected to be minor, as total exports of national goods (excluding re-exports and copper, due to the mine closure) account for only 1.1% of GDP. On the import side, about 25% of Panama’s foreign purchases come from the United States. A rise in the cost of these goods, coupled with potential supply chain disruptions, could elevate input prices and trigger inflationary pressures within Panama. Moreover, if global supply chains are further destabilized, import prices from countries beyond the United States could also increase, compounding the inflationary effect. Beyond direct trade impacts, the Panama Canal and related industries face exposure to disruptions in global commer...