New US tariff policies could significantly impact the Dominican Republic’s economy, according to economists and customs experts speaking at a recent colloquium, Listin Diario reported. The US has announced it will impose 10% tariff on imports from the Dominican Republic as of 1 August 2025.
The colloquium, hosted by the Padre José Luis Alemán, S.J. Center for Economic and Social Studies (CEPA) and coordinated by the Economic Analysis Team (EAE) of the Pontificia Universidad Católica Madre y Maestra (PUCMM), brought together leading voices to discuss the potential fallout.
Economist Alberto Veloz highlighted the Dominican Republic’s heavy reliance on free zone exports, particularly to the United States. In 2023 and 2024, these zones accounted for a striking 66% of the country’s total exports. “This could be a breaking point for our economy in the near future,” Veloz warned.
He noted that medical and surgical instruments are the primary export from free zones, where the value added is largely determined by the labor force employed. In 2024, out of the Dominican Republic’s US$12.9 billion in exports to the United States, a substantial US$8.60 billion came from the free zone sector.
The conclusion of the panel speakers seemed to be that the DR needs to boost its industry to meet global headwinds. Economist Luis Vargas emphasized that the Dominican economy is already grappling with global crises.
Vargas stressed the urgency of reindustrialization and re-agriculturization for the Dominican Republic. “These processes must be rooted in technological innovation, national identity, and above all, the creation of a democratic, republican, and solidary society and nation,” he asserted.
He painted a bleak picture of the global goods market since April 2nd, dubbed “Liberation Day,” with “uncontrollable reciprocal” tariffs causing widespread uncertainty. Major trading partners have been threatened with significant tariffs, including 54% on China, 35% on Canada, 30% on Mexico and the European Union, and 25% on Japan.
Vargas also pointed to a concerning trend in the Dominican Republic’s real GDP growth, which plummeted from 2.6% in 2019 to 1.8% in 2024, even hitting a negative 2.2% during the 2020 pandemic. While there was a rebound to 6.1% in 2021, he projects that real GDP will only reach 1.7% by the end of 2025. He noted that in the first three months of this year, real GDP had already receded to -0.2% from 1.6% in the same period last year.
Furthermore, Vargas highlighted a projected increase in the merchandise trade deficit from 3.9% of nominal GDP in 2019 to nearly 4.1% by 2025. The fiscal deficit is also expected to climb from 4.6% to 6.5%, leading to a rise in public debt from 78% to a staggering 101.6%.
Despite the grim outlook presented by the tariffs, during the PUCMM event, Customs advisor Eduardo Rodríguez underscored the Dominican Republic’s inherent advantages. He argued that the US tariffs violate World Trade Organization (WTO) rules and will lead to increased logistical costs, customs delays, supply chain disruptions, and negative impacts on cross-border trade. He also cited concerns about volatile ocean freight rates and the need for transport network reconfiguration.
Nevertheless, the DR has a reputation as a resilient country, with a strong business sector and geographic advantages. Rodríguez highlighted that the Dominican Republic boasts the fastest-growing economy in Latin America, with a projected GDP growth of 3.5% this year and 4.5% in 2026. He pointed to its strategic geographical location, competitive labor force, and world-class logistics and connectivity as key strengths. He further described the Dominican economy as open and pro-business.
Rodríguez also mentioned favorable ratings from investment firms, the country’s significant maritime connectivity (among the most important in Latin America and the Caribbean), and its third-highest air connectivity index. In terms of trade facilitation, he cited the 24-hour customs clearance, 670 Authorized Economic Operator (AEO) certifications, and the ability to clear over 80,000 containers in 24 hours.
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Listin Diario
17 July 2025