Mauritius Faces Mounting Trade Challenges Amid U.S. Tariff Pressures
Mauritius concluded 2024 with a pronounced trade imbalance. The fourth quarter recorded a deficit of MUR 52.3 billion, driven predominantly by imports of machinery and transport equipment, mineral fuels (such as oil and gas), lubricants & related products. While Mauritius has a long-standing reliance on imports due to limited natural resources, the situation is poised to be more complex in the current year following the imposition of a 40% tariff on Mauritian exports under a “reciprocal” trade policy in early April 2025.
Although Mauritius ships only 6.2% of its total exports (MUR 6.8 billion in 2024) to the United States, the imposition of a 40% tariff under a “reciprocal” trade policy is likely to trigger ripple effects for the local economy. This could disrupt demand for key export categories, particularly elastic goods, amplifying broader economic challenges.
Based on our assumptions (Figure 1), nearly 47.2% of these affected exports are considered “elastic” – meaning buyers might reduce purchases significantly if prices rise. We anticipate 52.8% of exports, including polished diamonds and live animals, to remain inelastic. Our rationale for this is that Mauritius imports rough and polished diamonds from major producers like Belgium, India, and Switzerland, processes or re-exports them, and sells them to destinations such as the United States, leveraging preferential trade agreements. Meanwhile, live primates serve as vital inputs for scientific research, making both export categories less sensitive to price fluctuations in spite of criticism from notable animal rights groups.
However, a significant relief is that the tariff does not appear to directly impact FX inflow from non-tangible exports such as offshore services (USD 1.3bn)2, tourism (USD 1.9bn)3, and real estates (USD 474.9m)4 totalling approximately to USD 3.7Bn (despite lacking immediate clarity on their specifications and duration). These sectors, collectively contributing approximately USD 3.7 billion annually as FX inflow, remain our vital foreign exchange drivers. Based on the National Accounts' sectoral growth forecasts5 issued in March 2025, we expect a combined incremental positive FX inflow of USD 52 million from these three sectors.
1 Data from Havard Growth Lab | 2 Calculated using FSC data | 3 BOM - Gross Tourism Earnings February 2025 | 4 BOM Press Release Preliminary Gross Direct Investment Flows: First Semester of 2024 (Ex. GBS) (annualized) | 5 Based on Gross Value Added at basic prices.
