USVI vs. BVI: A Caribbean Trade War Threatens Cross-Border Charter Travel & Trade
BVI Tariffs On USVI Charters
The BVI has proposed amending the Commercial Recreational Vessels Licensing Act of 1992 to increase tariffs on USVI charter boats and commercial yachts entering BVI waters in an attempt to boost it’s flagging economy, but such a move is expected to backfire, causing damage to both the USVI and BVI economies by creating uncertainty and higher costs for vacationers who wish to travel to the BVI via charters from popular USVI destinations like St. John or St. Thomas.
Proposed Charter Boat Fee Details
The current annual fee for overnight operators is $400, versus the proposed increase to $24,000 annually, which is a 5900% difference. For day sail charter operators, the increase is from $200 to $12,500, a 6150% difference.
| Operator Type | Current Annual Fee | Proposed Annual Fee | Percentage Increase |
|---|---|---|---|
| Overnight Charter Operators | $400 | $24,000 | 5900% |
| Day Sail Charter Operators | $200 | $12,500 | 6150% |
Fees May Increase As Early As June 1, 2025
The new BVI fees on visiting USVI charters could be passed as early as June 1, 2025. This has sparked significant concern among USVI-based charter boat companies. The fee changes could lead to substantial economic disruption, placing financial strain on charter companies and reducing the accessibility of BVI waters for USVI-based charters.
How USVI Charter Companies Are Processing BVI Fee Change Proposals
Proposed Fees Viewed As Excessive
The increased fees for USVI charter companies entering the BVI are being met with concern, as they seem excessive and could make charter boat trips from the USVI to the BVI cost-prohibitive for operators who don’t regularly run charters to the territory.
Pushing Out USVI Charter Operators To Take The Whole Pie
Some speculate this may be an intentional move by the BVI to limit the number of USVI-based boats bringing tourists for short visits, instead encouraging travelers to stay longer and contribute more directly to the BVI economy through hotels, dining, and shopping.
Ignoring The Vital Role USVI Charters Play In BVI’s Tourism Economy
USVI charters play a vital role in introducing thousands of visitors to the BVI, potentially converting them into long-term vacationers, much like how cruise ship excursions to St. John often lead to repeat visitors who return for extended stays.
Predicted Impact on Travel and Tourism
Based on current trends, the following predictions can be made about how the fee increases could impact the USVI & BVI cross-border travel and each other’s respective economies:
Decline in BVI Charter Bookings: With rising costs, fewer USVI-based charters will venture into BVI waters, leading to a 15-25% reduction in cross-border excursions.
Shift in USVI Tourism Strategy: The USVI may promote local destinations like St. John and Water Island more aggressively, reducing reliance on BVI itineraries.
Consumer Backlash: Higher costs for tourists will lead to fewer bookings, particularly among budget-conscious travelers, reducing overall visitor numbers.
Industry Consolidation: Small charter operators may struggle to absorb costs, leading to mergers or business closures.
As this small trade skirmish between the USVI and BVI unfolds against the bigger backdrop of looming Trump tariffs on the UK, Mexico, the EU, etc., it may become another example of how an unwillingness to cooperate among America’s historical trade partners to achieve mutually beneficial results risk economic downturns for all parties.
New Developments Evolving
Since the proposal has not been finalized, this remains a rapidly evolving issue. As of February 28, 2025, the BVI is calling for dialogue while the USVI considers its own tariffs in response to the escalating dispute. BVI Premier Natalio Wheatley justifies the proposed fees by highlighting that USVI charters generate up to $100 million annually while contributing only a few hundred dollars per vessel to the BVI. He also estimates that a single USVI charter company could earn between $50,000 and $100,000 per week. However, many local charter businesses, such as Island Roots Charters, are family-owned and argue that these figures are inflated compared to their actual earnings.
Perceived Profitability Bias
If the BVI is indeed open to dialogue, the first conversation should focus on whether these revenue estimates are inflated or fail to account for operational costs, seasonal fluctuations, and other financial constraints. Otherwise, the BVI risks falling into the trap of perceived profitability bias or wealth illusion—assuming another party is making excessive profits and using that assumption to justify increased fees, tariffs, or regulations without a true understanding of actual margins. If this happens, the BVI could easily implement misguided policies that unfairly burden businesses and strain economic ties between the territories.