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US-Cuba Trade Could Grow Significantly

Pre-embargo Cuban cigars displayed in window of Cuban-themed gift shop in the Little Havana neighborhood of Miami, Florida, May 17, 2014.

Trade and economic links between the United States and Cuba could significantly expand with the end to their half century of diplomatic estrangement, but likely not overnight.

The U.S. still maintains an economic embargo against the communist-run island nation, separated by just 145 kilometers of water from the southern U.S. shore. Congress is unlikely to overturn all the restrictions anytime soon, although President Barack Obama says some trade will resume as the two Western Hemisphere countries normalize relations.

U.S. commercial links with Cuba ended with Fidel Castro's takeover of the country and his nationalization of American-owned businesses in the 1960s. Now, his brother, President Raul Castro, is joining Obama in seeking to ease the mutual enmity.

U.S. financial companies, farmers, travel companies, energy producers, car manufacturers and other businesses could eventually enter the Cuban market. Cuban rum distillers and cigar manufacturers could find new business in the U.S.

Decades ago, in the days before the Castros assumed power, the U.S.-Cuba trade was even more robust. Freighters carried Cuban nickel and limestone to the U.S. port in New Orleans, while beans grown in the U.S. heartland were shipped to Havana. Cubans ate rice grown in the U.S., while American tourists filled Havana's casinos and night clubs.

Barbara Kotschwar and Gary Hufbauer, analysts at the Washington-based Petersen Institute for International Economics, estimated Thursday that U.S. exports to Cuba could eventually hit $5.9 billion annually, while Havana's exports to the U.S. could reach $6.7 billion.

With the easing of U.S.-Cuban relations, the analysts said other countries could also increase their direct investments in Cuba, from less than $1 billion today to as much as $17 billion.

Some information for this report comes from AP and AFP.