Palau Avoids U.S. Tariffs as Trump Shakes Up Global Trade

While U.S. President Donald Trump’s new tariffs are shaking up trade worldwide, the small Pacific island nation of Palau has managed to dodge the economic hit. Speaking in Sydney on Thursday, Palau’s President Surangel Whipps Jr. shared a mix of relief and hope, pointing out that a solid partnership with the U.S. is good news not just for Palau but for the whole Pacific region.

Palau, home to just 17,000 people, has a special deal with the U.S. called the Compact of Free Association. In exchange for financial help, the U.S. gets military access to Palau’s land and waters a big deal as tensions with China heat up. Unlike nearby countries like the Marshall Islands and Micronesia, which are now facing tariffs, Palau’s tiny export market seems to have slipped under the radar. Whipps thinks this might be more of a fluke than a planned break.

In a talk at the Lowy Institute, Whipps opened up about how much Palau counts on the U.S., especially as programs like USAID, once key for things like internet cables and climate projects, are scaled back. “I’m hoping it’s just a pause to regroup and come back stronger,” he said, borrowing the old Reagan line “peace through strength,” which he figures Trump might like. For Palau, a dependable U.S. means protection from both regional trouble and natural threats like rising seas and stronger storms.

Whipps also spoke about climate struggles, frustrated by Trump’s decision to pull out of the Paris Agreement again. He encouraged Pacific nations to speak louder on climate issues and backed Australia’s push to co-host the COP31 summit, even with its coal and gas exports. While Trump’s tariffs rattle the globe, Palau’s lucky break gives it some breathing room