*by Joseph Cox
KINGSTON, Jamaica, Nov. 8, CMC – US midterms, sovereign debt, migration and the changing price of strategic access
The US midterms have changed the balance of power in Washington. Democratic control of both chambers of Congress will constrain President Donald Trump’s legislative agenda from January 2027. But for Caribbean economies, divided government does not necessarily mean reduced economic risk. It may instead combine legislative gridlock with continuing executive discretion over trade, immigration and foreign policy.
Financial markets have responded sharply and unevenly. Wednesday’s post-election rally gave way to a steep Thursday sell-off, with the Nasdaq Composite falling 5.52 per cent and the S&P 500 4.36 per cent. Semiconductor stocks were particularly exposed, amid investor concerns that Democratic control of Congress could slow AI infrastructure expansion through tighter regulation. Renewed expectations of higher US interest rates added to the uncertainty. For Caribbean economies, the immediate concern is whether deteriorating global risk appetite and renewed pressure on US borrowing costs will translate into wider sovereign spreads and more expensive external financing.
Debt Markets: Relief or Repricing?
Caribbean external borrowing costs reflect US benchmark yields plus sovereign risk premiums. Before the election, Jamaica’s US-dollar bonds maturing in 2037 and 2039 yielded approximately 6.35 and 6.27 per cent, with respective benchmark spreads of 145 and 130 basis points. Comparable Dominican Republic instruments maturing in 2035 and 2037 yielded 6.76 and 6.87 per cent, with spreads of 189 and 196 basis points. (BondTerminal, 2 Nov. 2026) These are secondary-market yields and pre-election benchmarks, not evidence of a post-election rally.
Even if Treasury yields fall, widening credit spreads could erase the benefit. Existing fixed-rate debt is generally insulated from changes in market yields until refinancing. The real exposure lies in refinancing, new external issuance and variable-rate liabilities. Whether lower Treasury yields translate into cheaper Caribbean borrowing will depend on subsequent movements in sovereign spreads. If borrowing costs remain elevated through 2027–2028, they could squeeze the fiscal space available for infrastructure and social services.
Gridlock Without Predictability
Congress can scrutinise immigration enforcement, contest appropriations, delay appointments and constrain new tax or spending legislation. It can also provide alternative diplomatic channels. Yet presidential authority over significant aspects of sanctions, immigration administration and foreign policy remains. A divided Washington may therefore send conflicting signals to international partners rather than restore confidence.
That uncertainty has a price. Governments and investors may seek safeguards, diversify relationships or demand higher returns when American commitments appear vulnerable to reversal. Institutional checks can be strengthened without necessarily rebuilding international trust.
Migration and the Remittance Channel
The Migration Policy Institute (Oct. 2026) estimates approximately 980,000 deportations, including removals and returns, during the first 18 months of Trump’s second administration. Roughly 580,000 were formal removals—an annualised 380,000, compared with 392,000 and 373,000 annually during Barack Obama’s first and second terms. Formal removals and returns are distinct enforcement categories, and aggregate totals do not capture the effects of enforcement on established migrant households. The comparison also does not capture enforcement intensity: monthly deportations following arrests inside the US rose from approximately 8,000 early in the term to 19,000 during May–July 2026.
For the Caribbean, employment disruption and uncertainty among migrants may matter as much as deportation totals. The Dominican Republic received US$11.87 billion in remittances in 2025, more than four-fifths from the US. Jamaica recorded US$3.25 billion in net receipts, while Haiti received approximately US$5.09 billion in fiscal 2025, with an estimated 79 per cent originating in the US. These flows support consumption and foreign exchange availability. Enforcement uncertainty can initially stimulate precautionary transfers, but lost earnings and deportations threaten their sustainability.
The Price of Strategic Access
Caribbean states depend on US markets, financial channels, mobility and security cooperation. Increasingly transactional diplomacy can raise the cost of that access through compliance demands, policy concessions or pressure over third-country relationships. Yet access runs both ways: the Caribbean provides strategic maritime geography, security cooperation and diplomatic relationships of value. Divided government may open congressional channels for negotiation without removing executive pressure.
CARICOM’s own fragmentation complicates the bargain. The October 2026 UN vote on the US embargo against Cuba exposed a departure from a longstanding regional position: seven of 14 independent CARICOM states supported the resolution, three abstained, Trinidad and Tobago opposed it and three did not record votes. National motivations differed, and disagreement alone is not disunity. But when members diverge on a longstanding collective position, external interlocutors gain leverage to deal bilaterally rather than with the Community. Washington may have intensified these pressures; it did not create CARICOM’s institutional weaknesses.
What the Region Should Do
First, CARICOM should establish a binding consultation protocol, building on existing mechanisms such as the Revised Treaty of Chaguaramas and decisions of the Conference of Heads of Government, requiring notification and rapid consultation before members vote or conclude bilateral arrangements affecting collective positions. Outcomes should be reported to the Conference. Achieving genuinely binding language will be politically difficult, yet consultation would strengthen accountability without giving other members a veto over sovereign decisions.
Second, and with particular urgency, the Community should coordinate its Washington ambassadors, diaspora organisations and Caribbean-American legislators in a joint engagement strategy for the new Congress. Priorities should include remittance costs, deportee reintegration, disaster financing and debt relief. A unified presence in the capital offers an immediate opportunity for coordinated engagement.
Third, finance ministries should assess opportunities to extend maturities and pre-fund 2027–2028 refinancing requirements where market pricing justifies the carrying cost, rather than assume current financing conditions will persist.
Fourth, governments should work with banks and money-transfer operators to lower transfer fees, improve cross-border payment systems and diversify payment channels, while recognising that migrant residence determines the underlying remittance corridors.
Most of this agenda can begin without Washington’s consent. It requires CARICOM members to treat collective leverage as an asset worth protecting.
Beyond the Election
The midterms shifted political power in Washington without removing the economic and geopolitical pressures confronting the Caribbean. For energy-importing Caribbean economies, oil price volatility driven by the Iran conflict threatens to increase import bills, widen current account deficits and intensify fiscal pressures through higher public-sector energy costs and subsidies. In the short term, governments and businesses must monitor Treasury yields, sovereign spreads, energy prices, migrant employment and remittance flows. Over the medium term, the critical tests will be refinancing costs, economic diversification, the durability of US commitments and the region’s capacity to negotiate collectively.
Congress may constrain the American presidency. It cannot restore CARICOM’s internal cohesion. That responsibility rests with the region itself.
*Joseph Cox is a Jamaican economist, management consultant and former assistant Secretary-General of the CARICOM Secretary General
CMC/jm/kb/2026