Puerto Rico must capitalize on new mercantilist shift in US trade policy
Raúl Burgos argues the island’s jurisdiction and manufacturing capacity can help it thrive under reshoring and tariff-focused policies.
In recent months, the United States has ramped up its use of tariffs and industrial policy as instruments of economic strategy, signaling a definitive shift toward what many are calling a “new mercantilism.” This evolving framework — characterized by reshoring, trade protectionism and national security-linked industrial planning — is rapidly replacing the open-trade ideals of previous decades.
As of April, the U.S. has enacted tariff policies affecting more than 180 countries. Under the so-called “Liberation Day” initiative, a baseline 10% universal tariff now applies to nearly all imports. In addition, around 60 countries — including major trading partners like China, India, the European Union and Japan — face higher “reciprocal” tariffs ranging from 17% to 49%, based on their trade practices and deficits with the U.S.
China stands out as a singular case, with a cumulative tariff rate of up to 145% on its exports to the U.S. While most countries are currently under a 90-day pause for these elevated tariffs, the baseline 10% duty remains firmly in place. The global impact has been significant, driving market volatility, straining international trade relations and placing pressure on small and midsize enterprises (SMEs) worldwide.
In a surprising pivot, the administration recently announced temporary exemptions for certain electronics — including smartphones and computers — from the newly imposed reciprocal tariffs. These products, once subject to the full 145% rate, now benefit from a 90-day reprieve, offering short-term relief to tech firms and consumers. However, Commerce Secretary Howard Lutnick emphasized that the exemptions are temporary and that new sector-specific tariffs, particularly targeting semiconductors and pharmaceuticals, are expected within two months.
Further tightening the policy landscape, the administration has launched a Section 232 investigation into semiconductor imports, citing national security concerns. This probe could pave the way for additional tariffs designed to boost U.S. manufacturing capacity in critical tech sectors.
These developments will have a direct and lasting impact on Puerto Rico’s economy, particularly given our dependence on imports for basic goods and our strong export presence in high-value manufacturing. While the risks are real, this also presents a once-in-a-generation opportunity to revive and reposition Puerto Rico’s industrial base.
An island on the front lines of trade realignment
Puerto Rico’s unique status as a U.S. jurisdiction brings strategic advantages: legal certainty, currency stability, proximity to mainland markets and full access to federal institutions. But it also leaves the island directly exposed to shifts in federal trade policy. Tariffs on components or raw materials can inflate costs for local manufacturers, while exclusion from national trade incentives or reshoring initiatives can diminish our competitiveness.
And yet, Puerto Rico offers what few others can: a dependable, U.S.-aligned base for advanced manufacturing, logistics and supply chain reconfiguration. As the U.S. accelerates efforts to reduce its reliance on offshore production in strategic sectors, the island is well positioned to fill the gap. But success will require swift, strategic action.
A reshoring agenda for Puerto Rico
To turn this global trade realignment into a local opportunity, Puerto Rico must develop and execute a forward-thinking, integrated reshoring agenda. Key pillars include:
- Industrial policy alignment: Collaborate with federal agencies to ensure Puerto Rico is explicitly included in reshoring programs and national supply chain strategies.
- Workforce development: Expand and accelerate technical education initiatives focused on pharmaceuticals, electronics, logistics and energy systems.
- Permitting and infrastructure: Modernize energy and transport infrastructure while streamlining permitting processes to meet private-sector timelines.
- Public-private collaboration: Equip local businesses, especially SMEs, with the tools, financing, and support needed to participate in new supply chains.
Equally important, Puerto Rico’s leadership must prioritize consistent engagement with Washington. This is no time for passive observation or political division. We need a unified, high-impact federal affairs strategy that advocates for our inclusion in trade incentives, manufacturing tax credits and national security designations.
Seizing the moment
The global economy is rapidly shifting away from liberalized trade toward strategic self-sufficiency and realignment. For Puerto Rico, this shift is not a threat, it is an open door to redefine our value proposition in both national and global contexts.
We can be a vital part of the U.S. solution: nearshore, cost-competitive, and already within the legal and regulatory framework of the American system. But we need political will, urgency and cross-sector leadership to capitalize on the moment.
As supply chains fragment and economic alliances evolve, Puerto Rico cannot afford to be a bystander. The global economy is being redefined — and we must claim our role in shaping what comes next. There is a new game in town.
Let’s not sit on the sidelines. Let’s play!
Raúl Burgos is president and managing partner of Global 1080 Business Solutions, a boutique consulting firm focused on C-level advisory, strategic growth and operational improvement. He is also the founder of the Puerto Rico Business Group on LinkedIn, a network of more than 30,000 professionals committed to Puerto Rico’s business environment.
