Gov. Albert Bryan Jr. said “amen to destroying” the federal Education Department, calling it “terrible” in a panel discussion on “Trump 2.0” Saturday, hosted by the League of Women Voters of the Virgin Islands at the UVI Innovation Center on St. Thomas and remotely via Zoom.
The move is among several bright spots in the administration of President Donald Trump that the governor touted, noting he “always looks for the opportunity.” His fellow panelists — UVI economics Professor Mark Wenner of St. Thomas and financial and business development expert Jed JohnHope of St. Croix — sounded a more cautious note, warning that the 116 executive orders signed by Trump since he returned to office have brought economic uncertainty and the potential for inflation, a downturn in tourism, and the decimation of the territory’s immigrant workforce that is the backbone of the hospitality and construction industries.
“I promise I’m not a Republican,” Bryan joked. While there are “a lot of things that are frightful and that we should definitely pay attention to … the news media does a terrible job of informing us of what is actually going on and they do an excellent job of terrifying everybody about what is going on,” he said, riffing on a familiar GOP trope.
“Actually, we went to the White House and had the opportunity to sit down with many of his cabinet members as well as listen to the president firsthand, and there are a lot of things that are skewed because the news wants them to be that way. There are many opportunities,” said Bryan, referring to a series of meetings his office and V.I. senators held with federal officials in Washington, D.C., in February. He said he’s also hewing closely to Puerto Rico Gov. Jenniffer González-Colón, who is Republican and “a Trumper,” as part of his strategy to deal with the new administration.
Among the bright spots is Trump’s “drill baby, drill” attitude toward fossil fuels, which bodes well for reopening the St. Croix refinery, Bryan said, while lamenting the Biden administration’s EPA that shut down the aged plant under an emergency order in May 2021 because it deemed the environmental risks too grave for it to continue operating.
While the refinery will “probably get expedited permitting” to come back online, “the problem is we don’t have the capacity to monitor it. For example, there’s no air pollution specialists at DPNR, and with a retrenchment of the federal EPA, who is going to monitor the safe operation of this facility?” said Wenner, referencing massive cuts across all federal departments by Trump’s “Department of Government Efficiency,” run by Elon Musk. Over the medium- to long-term, this will increase the risk of accidents and emissions to the detriment of Crucians on the South Shore of St. Croix or downwind of the refinery, he said.
“I certainly adhere to what Mr. Wenner was saying in terms of the safety around it, but I was visited by Mike Martucci of the EPA last week [the new Region 2 administrator], and the one thing he said to us, he said that ‘I’m going to do everything I can do within the letter of the law to ensure that you get your refinery back.’ And that’s important to him and it’s important to me, because the law is the law,” said Bryan, referring to a visit by Martucci that was announced after the fact, so there was no press availability.
“What we were dealing with in a Biden administration was total unreasonableness. When you have the EPA administrator tell you that he doesn’t care about your economy, that it is of no concern, I think that’s blatant disregard for the people,” he said. “I mean, you have to be able to figure out a way where the people and these corporations can [operate] in a safe environment, and I think that’s what we’re working on now.”
Federal Departments in Flux
As for the U.S. Education Department, Bryan said he welcomes funds going directly to the states, or in this case the territory, to manage instead.
“I am behind President Trump 100%. Why do you think we send back all that money to Education?” he said, referring to grants that are lost if not used within a specific timeframe for tightly targeted projects, but which he said bureaucratic red tape makes impossible.
“The Education Department is terrible. It’s terrible. Amen to destroying in it. The way that they look at this is that they’re gonna give us the money directly. Instead of all this red tape — every year we have to go to this third-party fiduciary, and then we have to go through the Department of Education, which you could say is a fourth-party fiduciary,” he said.
Wenner cautioned that “at least in the interim transition there will be lots of uncertainty as to how our Department of Education will be able to continue programs that are essentially heavily supported by the federal government,” such as Pell Grants, a need-based federal financial aid program for college students from low- or middle-income households.
The same goes for FEMA, he said, which is also being dismantled under Trump, with the idea that funds will go directly to state governments to handle disaster relief. “We need to be concerned about a kind of cumulative effect of all of these policy changes and uncertainty and reduction in funding in the sense that we are an extremely vulnerable society and the combination of all of these other policy changes … will have a magnified effect,” said Wenner.
Tourism and Tariffs, Tariffs, Tariffs
With so much uncertainty, consumers curtail spending, and that could directly affect tourism, the USVI’s main economic driver, he said, noting that the Consumer Confidence Index is at its lowest level since the 2008 recession. “When people lose confidence and when their disposable income is going down, one of the first things they economize on is travel. So, as a major tourist destination, we probably suffer from less tourist demand, less tourist expenditures,” said Wenner. Moreover, as tourism declines, so does airlift as airlines reconfigure their routes.
Bryan, however, expressed confidence the V.I. market will weather the changes. “Tourism is on fire. St. Croix went from 60,000 to 250,000 cruise tourists. We’re upping our [airline] seats, we’re upping our occupancy rates, where we have one of the highest average daily rates in the Caribbean, which is good. Our tourism product is expensive and like Mr. Wenner said, it is getting more expensive because we don’t cater to a middle class. We cater to the upper-middle class, semi-luxury part of the market,” he said, which isn’t as affected by financial downturns.
Wenner also cautioned that the Trump administration’s seesawing on tariffs, and its proposed levy of up to $1.5 million on Chinese-built or flagged ships calling on U.S. ports, will increase the price of everyday goods, 96% of which the USVI must import, most often using smaller Chinese-made vessels. Additionally, there’s the backlash by other countries that have retaliated with their own tariffs on the U.S., including Canada, which has also pulled all American liquor from store shelves nationwide, including rum produced in the U.S. Virgin Islands — rum the territory is dependent on selling to help fund the Government Employees’ Retirement System.
Still, Bryan sees opportunity, given the territory’s unincorporated status, which exempts it from federal tariffs and duties that apply to goods entering the U.S. mainland and offers advantages for businesses that want to ship products to the USVI, add value, and then export them stateside without paying tariffs.
“Lately I’ve been having real good conversations with Guyana. As you know, they have a lot of oil there. It’s interested in bringing that oil to the Virgin Islands to refine if we could get our refinery up, and it looks like there’s a possibility with the Trump administration,” Bryan said. Likewise, it could revive the USVI’s luxury goods market, he added.
“With these new tariffs coming out of China, we can bring stuff through the Dominican Republic, through Trinidad, through Barbados, from China, bring it directly from China into St. Croix, into St. Thomas, and be able to sell those products at a considerably less rate than we have before,” Bryan said. “That means all of a sudden a Gucci bag where you might have paid $675 for plus tax in Florida will be $650 with no tax in the Virgin Islands. Rolex, you can think about all the things that we sell that will become appealing to us again. We capitalize on that market. Electronics direct from China, they would be 145% cheaper than in the states. Imagine telling millions of millennials and Gen Z, hey, you could get your iPhone in the Virgin Islands for half the price. What do you think is gonna happen to our tourism market?” he said. (On Friday night Trump exempted some electronics such as smartphones, laptops and televisions from the tariff, though they are still subject to a 20 percent fee.)
The question remains, however, who will work in manufacturing and rebuilding from the 2017 hurricanes if the USVI is not exempted from the administration’s crackdown on migrants, which has been most visible at the territory’s ports of entry and ferry terminals.
Unless temporary protective status for Haitians and Venezuelans remains — a judge has temporarily blocked Trump’s March 25 order to end the program — the USVI stands to be hit hard, said Wenner. “This will affect us because we have two sectors that are dependent on immigrant labor, our construction sector and our hospitality leisure sector, so we will have an even more huge shortage of labor,” he said.
The Way Forward
JohnHope, in a presentation titled “Flipping the Johnnycake,” said that in response to the unpredictability and chaos of the Trump administration, the territory needs to strengthen its economic base, including building regional trade alliances; diversify its revenue sources, including reducing its reliance on federal funding and protecting against tourism volatility or declining rum sales; make more efficient use of public funds, including austerity measures, anti-corruption initiatives, and public-private partnerships; and aggressively attract private capital. “Public funds alone cannot fund our future,” he said.
Now is the time for the USVI to leverage its duty-free status into niche manufacturing — construction materials, modular housing components, agri-processing and marine tech, for example — that feeds mainland markets or disaster recovery supply chains. “Made in America” is a priority of the Trump administration, “and the Virgin Islands can help,” he said.
It also needs to lobby Trump to bring back Section 936 of the federal tax code, enacted in 1976, that allowed subsidiaries of U.S. firms operating in Puerto Rico to pay no federal taxes on profits derived there, even if the money was returned to the United States, said JohnHope. Additionally, through the Caribbean Basin Initiative in 1982, 936 funds also became a low-cost source for commercial development activities in other countries of the region, according to the nonprofit Teaching for Change. However, the exemption was deemed ineffective and was phased out by 2006.
To address workforce shortages, the territory should “scale vocational training and certification programs to support manufacturing and technical industries,” said JohnHope, and as a secondary strategy, leverage Puerto Rico’s workforce. The USVI could also take lessons from its neighbor and focus on “high-value, low-weight sectors like pharmaceuticals and medical devices — ideal for an island economy with limited port capacity,” he said. There are also opportunities in petroleum products, rum, watches, renewable energy components, and emergency supply manufacturing tied to FEMA and Housing and Urban Development needs.
“Puerto Rico taught us that tax incentives can drive rapid industrialization — but unless they’re paired with long-term local investment, workforce development, and economic diversification, they can vanish as quickly as they came,” said JohnHope.
The Economic Development Authority “has great incentives” but they need to be better marketed to make substantial strides in business attraction, he said. As Bryan often notes, 87 people pay 70 percent of the income taxes in the Virgin Islands, and the territory should invest in a program to attract 87 more, said JohnHope.
Additionally, with tourist demand forecast to decline, St. Thomas needs to increase its offerings to become more competitive and should make reopening the Mahogany Run Golf Course a priority. The territory also should subsidize flights and invest in opening new markets, he said. “Airline routes can be bought for around a $2 million per year minimum revenue guarantee. Airlines are very interested in adding new routes, which drives hotel demand.”
Bottom line, said JohnHope, the USVI needs to be decisive and strategic in addressing the chaos and uncertainty of the Trump administration.
“The effects of the tariffs will be worse in the isolated Virgin Islands. We need to be proactive and tell Washington what we need to be successful,” he said.
Saturday’s panel discussion is available to view on the League of Women Voters of the Virgin Islands’ Facebook page.
Editor’s Note: A previous version of this story incorrectly stated that the Education Department oversees school lunch programs. That is a function of the U.S. Department of Agriculture’s Food and Nutrition Service.
