Oct. 18, 2024 – With the U.S. presidential election just weeks away, Latin American economies are preparing for potential disruptions to trade policies and tariffs. As political uncertainty in Washington intensifies, countries across the region are bracing for shifts that could impact exports, investments, and bilateral trade agreements.
The stakes are high, as the outcome of the U.S. election could determine whether current trade policies will be maintained or undergo significant changes. Both major candidates have hinted at possible shifts, leaving regional governments and businesses unsure about the future of trade relations with their largest economic partner.
Trade Tensions on the Horizon?
Some Latin American leaders are concerned that the U.S. election could lead to a resurgence of protectionist policies, similar to those seen during the Trump administration. The threat of new tariffs or stricter trade regulations could hit major export sectors, including agriculture, manufacturing, and raw materials.
Mexico, a top U.S. trading partner, is particularly vulnerable to any policy shifts. The U.S.-Mexico-Canada Agreement (USMCA), which replaced NAFTA, could face renegotiation or adjustments under a new administration. “If tariffs come back on the table, the ripple effect will be felt throughout the supply chain,” said Enrique González, an economist at Mexico’s National Institute for Trade Policy.
Brazil, Argentina, and Chile, which rely heavily on the U.S. market for agricultural exports and metals, also face risks of tariff hikes or increased scrutiny on trade.
Concerns Over a ‘Decoupling’ Trend
A growing trend of economic decoupling—where the U.S. seeks to reduce reliance on certain trading partners—has also raised concerns. With both major U.S. candidates emphasizing the need to reduce dependence on foreign supply chains, Latin America fears that strategic sectors like manufacturing and auto parts could be affected.
“Latin American economies benefit significantly from integration with U.S. supply chains,” said Gabriela Silva, an analyst with a trade consultancy firm in São Paulo. “Any attempt to decouple could hurt industries that rely on exports to the U.S. and complicate economic recovery.”
The China Factor
The election’s impact on Latin American trade also extends to U.S.-China relations. Both nations compete for influence in the region, and any escalation in tensions between Washington and Beijing could force Latin American countries to re-evaluate their economic ties with both powers.
Countries like Brazil and Peru, which export large amounts of soybeans, copper, and other commodities to China, are watching closely. “If U.S.-China tensions escalate, Latin America will feel pressure to align more closely with one side, which could have trade implications,” Silva added.
Hedging Against Uncertainty
Latin American governments are taking steps to mitigate potential fallout from the U.S. election. Mexico and Brazil, for instance, are exploring new trade deals and expanding partnerships with the European Union and Asian markets to reduce reliance on the U.S.
Meanwhile, regional economies are also working to diversify exports and invest in sectors less exposed to external shocks. “We need to think beyond traditional trade partners and look for new opportunities,” said Argentina’s Trade Minister, Alicia Pérez.
What’s at Stake?
A change in U.S. trade policy could have immediate consequences for industries ranging from automotive to agriculture. The imposition of new tariffs or delays in customs procedures could disrupt supply chains, increase costs, and slow economic growth.
With inflation already a concern in countries like Argentina and Brazil, any additional trade barriers could complicate efforts to stabilize prices. For smaller economies in Central America and the Caribbean, which depend heavily on U.S. trade and remittances, the stakes are even higher.
Outlook: Preparing for Uncertainty
As the U.S. election draws closer, Latin American leaders are adopting a wait-and-see approach, while quietly preparing for worst-case scenarios. Policymakers are urging businesses to build resilience by diversifying markets and reducing dependence on exports to the U.S.
Ultimately, the future of trade between the U.S. and Latin America will depend on the election outcome and the policies of the next U.S. administration. For now, the region remains on edge, bracing for what could be a significant turning point in its economic relationship with the United States.
As González notes, “The U.S. election isn’t just about domestic policies—it has global consequences. For Latin America, the impact could shape the region’s trade dynamics for years to come.”