Since the outbreak of the tariff war between China and the United States, Latin America has found itself in an uncomfortable position: distant from the conflict but close enough to be affected by the hostilities. While Washington and Beijing exchanged tariff hikes and threats, Latin American countries largely maintained a neutral stance, focusing on weathering the global uncertainty and, most importantly, identifying opportunities to position themselves within the new international trade routes. The tension has reconfigured trade flows, made products more expensive, and, at the same time, opened a window for Latin America — historically a supplier of raw materials — to gain ground as a significant trading partner.
Argentina
Amid the tariff wars, Argentina finds itself in a delicate position. Javier Milei’s government has expressed its intention to align itself with the tariff policies of Donald Trump’s administration, adjusting to the reciprocal tariff proposals promoted by Washington. During a recent visit to Florida, Milei announced that Argentina had implemented nine of the sixteen requirements requested by the United States in this regard. However, this stance has led to Argentine exports being subject to new 10% tariffs by the United States, particularly affecting key industrial products such as steel and aluminium, which face 25% duties.
China has responded to Washington’s measures by raising its tariffs on U.S. products to 84%, further intensifying the trade dispute. This situation places Argentina at a crossroads, as it seeks to balance its relations with both powers while facing domestic economic pressures. Additionally, the country is negotiating a $20 billion loan with the International Monetary Fund (IMF), for which U.S. backing is crucial. However, this support has been conditioned on the cessation of financial agreements with China, further complicating Argentina’s diplomatic and economic strategy.
The intensification of the tariff war has also had a direct impact on Argentina’s financial markets. The country’s assets have suffered significant declines, reflecting investors’ growing risk aversion. The S&P Merval index recorded a 3.4% decline, while sovereign bonds in dollars showed an average loss of 2.4%. Analysts warn of a “perfect storm” for Argentina, which faces both commercial and financial pressures in an increasingly volatile global scenario, forcing it to navigate cautiously in a complex international environment, striving to balance its diplomatic and commercial relations while managing internal and external economic pressures.
Brazil
The ongoing trade tensions between the U.S. and China have significantly impacted Brazil’s economy. On the positive side, Brazil’s agricultural exports, particularly soybeans, have benefited substantially. Since China imposed tariffs on U.S. agricultural products, Brazil’s soybean exports to China have surged by 30%, reaching a record 70 million tonnes in 2023. However, this has made Brazil more dependent on the Chinese market, which now accounts for 72% of the country’s soybean exports compared to 58% before the trade war.
For Brazilian industry, the situation has been more challenging. The U.S. decision to impose 25% tariffs on Brazilian steel has significantly reduced exports, which fell from $2.3 billion in 2019 to $1.2 billion in 2023. Additionally, about 60% of Brazil’s industrial imports come from China, including critical components for manufacturing, and these have become more expensive due to the trade conflict.
The Brazilian government has responded by strengthening economic ties with both nations. Trade with China reached $150 billion in 2023 through BRICS cooperation, while simultaneously pursuing technology partnerships with the U.S. Some sectors have managed to capitalise on the situation — fruit exports to China, particularly melons, grew by 40% last year, and Brazilian automakers have gained market share in regions where Chinese vehicles face restrictions.
The government has also introduced new financing programmes for industries affected by the trade war, particularly in steel and manufacturing, while also investing in infrastructure to improve export efficiency. At the same time, trade negotiations with other regions—such as Southeast Asia and the European Union—have gained urgency, as Brazil looks to reduce its reliance on just two major partners. While the U.S.-China dispute shows no signs of ending, Brazil’s focus remains on stabilising its trade flows and protecting key sectors from further disruptions.
Peru
The announcement of a possible imposition of tariffs on Peru by the United States caused concern, particularly in the trade sector, due to the potential impact these measures could have on exports of key products from industries such as agribusiness, mining, and textiles.
In light of the uncertainty and fear of a potential loss of competitiveness with other countries, the government activated bilateral dialogue and monitoring mechanisms. As part of this response, the terms of the Free Trade Agreement (FTA) in force with the U.S. since 2009 were reviewed to identify potential violations or activate defensive mechanisms.
In addition to tariff barriers, the possibility of a recession in the United States was foreseen, which could bring additional challenges for Latin American economies and stock markets. Copper, avocado, blueberries, asparagus, and cotton were identified as the export products most affected by the measure.
When President Donald Trump confirmed the imposition of a 10% tariff on imports from several countries, including Peru, the Peruvian government took a proactive and diplomatic stance, prioritising direct negotiations with the United States and strengthening coordination between the executive and legislative branches to protect national economic interests.
At the same time, when tariffs of 34% were imposed on China, it was estimated that with a slowdown in the Chinese economy, Peruvian exports to the Asian country could be affected, specifically in minerals such as copper and iron, as well as zinc and agricultural products.
Subsequently, President Trump’s decision to authorise a 90-day pause in the application of tariffs for dozens of countries was welcomed by Foreign Minister Elmer Schialer, who described it as a positive step towards a more balanced economic relationship between the two nations. However, the U.S. president also confirmed an immediate increase in tariffs on products from China, raising them to 125%, adding a new component of tension to the global international trade scenario that could have repercussions in Peru.
Mexico
Mexico has maintained a relatively privileged position in the new global trade landscape, thanks to its integration into the United States–Mexico–Canada Agreement (USMCA), which has so far kept the country outside the scope of recent U.S. global tariffs. However, the critical tone adopted by the United States toward Mexico should not be overlooked, especially with the treaty’s scheduled review set for next year.
Mexico’s conciliatory stance has been key to preserving favourable conditions in its relationship with its main trading partner. Nonetheless, this strategy has not prevented the country from being targeted by tariffs in key sectors. Currently, Mexican exports of steel and aluminium face 25% tariffs, in effect since March, and vehicles and auto parts have been subject to the same rate since April, with partial exemptions under the USMCA.
It is worth noting that these tariffs are not part of the new global package announced by the U.S. administration on April 2, nor were they included in the 90-day tariff suspension granted to dozens of countries. This means that Mexico is not currently a primary target, though this does not diminish the impact of the existing measures, which exert direct pressure on strategic industries for the country.
Although Mexico has not been directly hit by global tariffs, its close economic integration with the United States exposes it indirectly to their effects. Among the potential risks are inflationary pressures, job losses, and a possible slowdown in economic growth. For consumers, one of the most vulnerable sectors is technology, as the cost of imported goods continues to rise due to the ongoing trade conflict with China.
Domestically, the Bank of Mexico has responded with a more accommodative monetary policy amid a sustained decline in inflation. In its last two meetings, it cut the benchmark interest rate by 50 basis points each time — an uncommon move — bringing it to 9% as of March. Inflation continues on a downward trend, reaching 3.80% in the first half of that month, moving closer to the official target of 3%.
Lastly, it is worth mentioning that the exchange rate has shown episodes of volatility. However, any further weakening of the peso could actually benefit Mexican exports by making them cheaper in dollar terms. Combined with the nearshoring momentum driven by the U.S.–China trade decoupling, this reinforces Mexico’s appeal as a regional manufacturing hub, even in the face of a revived “America First” narrative.
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