US tariff on free trade zones risks Dominican competitiveness, warns Adozona

The Dominican Association of Free Trade Zones (Adozona) has issued a stark warning regarding the impact of a new 12.5% U.S. tariff on its products. This measure significantly increases the cost of Dominican goods, potentially eroding the country's competitive edge against other nations accessing the U.S. market with lower tariffs.

Adozona emphasized that free trade zones have been crucial for the Dominican Republic's economic stability. However, maintaining this role in an international landscape with higher trade barriers demands immediate and strategic action from both the government and the private sector. The association stressed the urgency of addressing this challenge to prevent a loss of market share.

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The imposition of a 12.5% tariff by the United States on the free trade zone sector represents an increase in the cost of Dominican products, with the risk of losing competitiveness against other production origins that access the U.S. market with lower tariff rates.

Adding to the economic pressure, the current exchange rate in the Dominican Republic has also made doing business more expensive. This situation inflates the operating costs for exporting companies and diminishes the country's appeal as an investment destination compared to other locations. Despite these headwinds, Adozona reported a 3.7% growth in cumulative exports during the first half of 2026 compared to the previous year, though the volume of export containers saw a reduction in the same period.

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Sustaining that role in an international context with higher tariffs to access the main export market requires the Government and the private sector to work with a medium and long-term vision, and with the urgency demanded by the loss of participation.

The association highlighted that the Dominican Republic has been losing relative market share in several key export categories. This trend underscores the need for modernization, diversification of markets and products, and a strengthening of the country's structural competitiveness. Maintaining leadership in sectors like medical devices, electronics, textiles, footwear, tobacco, and diverse manufacturing requires an honest assessment of factors influencing competitiveness, including operating costs, logistics, talent development, infrastructure, and regulatory efficiency.

Adozona concluded that the combination of the new U.S. tariff and the unfavorable local exchange rate creates a dual pressure on the sector's competitiveness. This comes at a critical time when competition for investments and international market share has intensified.

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The combination of an additional tariff in the main destination market and an exchange rate environment that makes local operation more expensive, configures a scenario of double pressure on the sector's competitiveness, at a time when the dispute for investment and for international market share has intensified.