‘Tariffs’ is one of the buzzwords of 2025. Defined as taxes imposed by one country on goods imported from another country, tariffs are essentially trade barriers that raise prices and reduce available quantities of goods and services for businesses and consumers. They are also meant to create an economic burden on foreign exporters. This in theory will then encourage and stimulate production within the country applying the tariffs.
Costa Rica is tariff-crazy. I am no economist, but there are interesting anomalies in product pricing within our country. For example: A six pack of Imperial is cheaper in Colorado than in the carry out down the street in my barrio. Conversely, a variety of off-brand (but good quality) beers from Spain and Denmark are available in my local supermarket at about half the price of the locally brewed beers. How is that possible?
Monteverde cheese, produced and packaged in that same cloud forest area of Costa Rica, is cheaper across the board in Panama than here. As all who have lived here for any period of time are aware, everything from cars to refrigerators to laptops to flat screen TVs comes priced with additional and hefty surcharges, making our country one of the most expensive in the Americas. Unlike the present situation in the US, these tariffs are not applied as a reaction to any type of trade deficit.
So why do we have these excessive levies?
I consulted my Tico friend Josue, who has a degree in Business Administration from a local university, and his explanation should come as no real surprise. He blames the oligopoly (or near-monopoly), a relative handful of families well-connected in the halls of power in Costa Rica. All roads lead there.
The self-imposed tariffs on items such as automobiles act as a barrier to entry for smaller-sized potential competitors, protecting the interests of the oligopoly. Then the government uses the tariffs on all imported goods as a sort of petty cash slush fund. A few benefit while the vast majority pay more.
Josue concluded by saying, “In a truly free market, this kind of thing should not happen.” The 1%, it seems, is everywhere. As the old joke goes, it’s the golden rule: Those who have the gold make the rules.
At this writing, Costa Rica is hoping to negotiate the across-the-board 10% tariff on their exports to the US – both agricultural – coffee, bananas, ornamental plants – and technical – medical instruments, integrated circuits, and orthopedic items such as prosthetics and implants.
Will the current skirmish with this proposed tariff on Costa Rican goods to the US have any benefit for us in the way of reduced internal tariffs? I doubt it, but stay tuned anyway.
