CHARLOTTE AMALIE — The U.S. Virgin Islands is eyeing an opportunity to benefit from President Donald Trump’s dramatic attempt to reorder global trade by trying to exploit its unique status within the United States.
The U.S. Virgin Islands, a cluster of Caribbean islands purchased from Denmark more than a century ago, lies outside the U.S. Customs area — a technical distinction that exempts it from federal tariff policies.
As a result, the islands have been spared from enforcing the blanket 10% duty imposed by the US last week, and a new round of steeper reciprocal levies that Trump has paused for 90 days for all countries except China, which now faces 125% duties.
Governor Albert Bryan, Jr. says that exemption may offer the Virgin Islands a rare edge. Companies could ship goods into the territory without paying US tariffs, add value through manufacturing or assembly, and then ship those products to the mainland without triggering additional duties, he said.
“It’s like a perfect storm in terms of the opportunity that’s coming before us,” Bryan said in an interview,
Bryan said he’s been fielding queries from lawyers and industry groups that are trying to see if that loophole is real. Bryan himself called U.S. Customs and Border Protection — the agency responsible for collecting the tariffs — to directly verify the territory’s exemption.
CBP spokesperson Jeffrey Quinones confirmed in a phone interview that the Virgin Islands is outside the U.S. Customs zone and therefore excluded from national tariffs. He wouldn’t comment on how that specifically applies under Trump’s latest trade actions, saying further interpretation would be “purely speculative.” The office of the US Trade Representative didn’t return an email seeking comment.
The islands have, for the most part, been allowed to operate as a free port with the ability to set their own taxes and duties. The territory currently charges 6% on most imported goods, but Bryan said the rate could be cut to zero if needed to attract new business.
By contrast, nearby Puerto Rico, while also a US territory in the Caribbean, is inside the US Customs area and subject to all federal tariffs.
Still, profiting from the quirk is far from straightforward. The territory’s population is only a little more than 100,000 and the trade volume that currently passes through the Virgin Islands is small — accounting for just a few tenths of a percent of the U.S. total. Energy costs are expensive and it’s a long way off from consumer centers on the mainland. Most of the islands’ goods come from ports in Florida, not from abroad.
But Bryan said it has two deep water ports and industrial parks that could make it ripe for supporting niche industries like international shipbuilding and repairs — where foreign parts could be brought in duty free.
With a tourism-driven economy of just $4.7 billion — smaller than every US state and territory but the Northern Mariana Islands and American Samoa — it wouldn’t take much to move the needle, Bryan said.
“We’re so small that we will barely impact the market,” he said. “But just little droplets off of the incredible trade that goes on in the world would more than fill our baskets.”
By BLOOMBERG NEWS
—With assistance from Giovanna Serafim and Kevin Varley.
