LATAM Trade Ties With China to Continue Despite Trump’s Threats

Donald Trump's commitment to curbing China's influence in the region through intensified tariff measures is anticipated to significantly impact Latin American markets. However, experts emphasize that China will continue to play a critical role as both a major exporter to and importer from the region.

Donald Trump has pledged to impose tariffs of at least 60% on Chinese imports, citing concerns that Chinese companies are evading US tariffs by rerouting goods through third countries, including Mexico. Despite these potential measures, experts anticipate that trade relations between China and Latin America will remain resilient. José Manuel Salazar-Xirinachs, Executive Secretary, ECLAC, highlighted China's essential role in the region's economic framework. As the second-largest trading partner for Latin America and the Caribbean, and the most significant for South America, China is a leading destination for raw material exports and a crucial supplier of manufactured goods, capital equipment, and inputs. In 2024, trade with China accounted for 13% of the region's total exports and 22% of its imports.

ECLAC's 2024 International Trade Outlook report highlights that Latin American exports to China grew by 6%, while imports increased by 7%, marking the most significant expansion among the region's main trading partners. China's projected economic growth rate of 5% in 2025 is expected to further drive Latin American exports, contingent on the country’s economic policies and strategic projects. A notable example is the Chancay megaport in Peru, constructed by China’s state-owned Cosco Shipping Company. This development is set to enhance China's access to key resources such as lithium, copper, agricultural products, soybeans, and other raw materials from Latin America.

Félix Valdivieso, Director, IE China Center, emphasized that trade with China could exceed US$500 billion by 2025, with Brazil and Peru positioned as primary beneficiaries of Chinese investments. Mexico is also anticipated to play a key role in China’s nearshoring strategies. However, tensions linked to the USMCA and potential trade disputes with the United States and Canada are expected to intensify.

Moody's analysis indicates that Trump’s proposed tariff policies are expected to hinder economic growth and drive up inflation across Latin America, with Mexico and Brazil facing the most significant impact. Nevertheless, economic performance in Argentina and Colombia may partially offset these negative effects, providing some balance to the regional outlook.

Veneta Andonova, Academic, University of the Andes, underscored China's commitment to a long-term strategic vision in Latin America. “Unlike Western investors, China prioritizes patient investment, demonstrating less sensitivity to short-term returns while focusing on strategic infrastructure and technological collaborations.”