Top surprises from a trip to Cuba: Yahoo Finance’s Rick Newman
Yahoo Finance's Rick Newman breaks down his trip to Cuba and the surprises he encountered along the way
RACHELLE AKUFFO: Amid the historic wave of Cuban migrants entering the US, Yahoo Finance's Rick Newman took a trip to the country to learn a bit more about America's communist neighbor. He joins us now to discuss the most surprising findings from the trip. Good to have you back, Rick. So what stood out to you?
RICK NEWMAN: And those are some of my photographs I took just with my iPhone while I was there. Amazing contrast in Cuba-- some of the buildings are falling apart, and yet there's great art, there's great culture there, good food if you can go to restaurants that get imported products. A couple of things really surprised me on this trip, Rachelle.
I've got a full story up on the website, but just to tick off a couple of those things-- first, there actually is what you might call a burgeoning private sector in Cuba. I did not realize this, but the Communist government there has changed the rules in recent years, so you are allowed to start a private business now.
Tax rates are pretty high-- about 50% all in. But you are allowed to keep profits once you pay your taxes and abide by other rules. There are some limits on this-- you can only own one business, it can't employ more than 100 people.
But on this trip, I was able to talk to some business owners, and they're pretty ambitious. And one of the things they tell you over and over is that the US sanctions on Cuba, which have been in place for a long time and actually got tougher under the Trump administration, really make it difficult just to operate a business in any normal sense of the word.
There are financial restrictions that make it very hard to import anything, from raw materials to finished products. People told me, for example, sometimes you can't even get paper to make paper bags that people can use at gift shops. A clothing business owner told me the best way to get plain t-shirts in Cuba so local designers can print them up is to actually buy them in bulk in the United States or some other foreign country and then put them in your luggage and bring them on the airplane on the trip back to Cuba.
I mean, just amazing hurdles that these people have to go over. But there is a private sector forming there. And another recurring theme from government officials, private sector officials, people who work for state-owned businesses-- they want to buy more American products, everything from food, to fuel, to medical supplies. Sanctions make that very difficult.
And I'm not sure that is likely to change any time soon. But if we can ever get over the sanctions on Cuba, they seem to be a ready customer for a lot of American products.
RACHELLE AKUFFO: So then, I mean, as we saw the reset with Barack Obama, then we saw Trump imposing the sanctions again. In terms of President Biden, any prospect of reopening the relationship between the United States and Cuba?
RICK NEWMAN: It's a really interesting question, because Biden has actually said more than once that he wants to reverse the Trump policy on Cuba and basically go back to what Obama did. Sometimes I mix them up and I call them O-Biden-- I'm sorry about that. But he wants to go back more or less to what Obama did, which is open up and set the stage for more trade between the United States and Cuba.
But he has actually done very little since he became president. And the politics on this are very thorny. There are some very passionate mostly Cuban-Americans in Florida who are staunchly opposed to any reopening with Cuba. And that's because they or their families lost a lot when Fidel Castro took over the government in 1959.
And they say, no reopening to Cuba until that communist government changes its ways. On the other hand, a lot of people would like to do-- business people in the United States would like to be able to sell more products to Cuba, but there's just not a real strong constituency pushing for that. So the Biden White House may want to open up with Cuba, but I think they just don't feel like there's anything to gain from doing that and they might get punished by some voters in Florida if they were to open up.
So could be more to come on this in Biden's second year when he might have a little more freedom to do stuff. We will see in coming months.
RACHELLE AKUFFO: He certainly doesn't want to risk that voter backlash, indeed. Rick Newman there, thanks so much.