The Impact of Trump's Tariffs on Latin American Economies

U.S. President Donald Trump announced a new wave of global tariffs, dubbed "Liberation Day," affecting more than 60 countries with rates ranging from 10% to 44%.

Although Mexico and Canada were temporarily excluded from these measures, targeted levies on key sectors such as automotive, steel, and aluminum are already generating shock waves throughout Latin American economies. This article analyzes how these protectionist policies impact the region, from the slowdown in growth to governments' strategic responses.

Mexico, the US's main trading partner in the region, received partial relief by not being included in the reciprocal 10% tariffs. However, it remains affected by:

• The 25% tariff on imported cars, which went into effect on April 3, is a direct hit to this sector. Mexico exports 36.9% of the vehicles arriving in the U.S.

• The possible termination of the USMCA. Trump threatened to ask Congress to terminate the agreement, citing a $300 billion annual trade deficit with Mexico. President Claudia Sheinbaum has responded with "Plan Mexico," a €14.1 billion package to cushion the impact, although analysts predict a GDP contraction of up to 1% in 2025 if tariffs persist.

  
  

The vast majority of Latin American countries received the minimum tariff set by Trump: 10%. These countries are Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Panama, Paraguay, Peru, the Dominican Republic, and Uruguay.

The exceptions are Nicaragua, with 18%, and Venezuela, with 15%. Exclusive and prior tariffs on steel (25%) and aluminum (25%) are detrimental to countries like Argentina and Chile, which export these materials to the U.S.

The world's largest trading markets, China and the European Union, received tariffs of 34% and 20%, respectively.

In addition, disruptive measures have already generated:

• Latin American stock markets fell, following the volatility on Wall Street (the S&P 500 fell 4.84% on April 3).

• Inflationary pressures, as import costs for intermediate goods (e.g., auto parts) will increase, affecting local industries.

  
  

Trump's tariffs have intensified global uncertainty, with immediate effects on trade and investment in Latin America. While Mexico faces direct pressure, other countries must prepare for a possible slowdown in the global economy.

A clear sign was the fall in the price of crude oil and all stocks of tradable goods and commodity companies.

Oil prices fell 7% due to fears of a decline in global economic activity.

The price of crude oil fell below $70 a barrel, impacting the stocks of Argentine energy companies, which lost between 5% and 8%.

Raw material prices fall due to the imposition of new tariffs.

Fears about the economic impact of cross-tariffs have escalated, fueled by the perception of possible higher inflation and weakening economic growth.

Prices fell across the spectrum of stock market assets, from crude oil to Big Tech stocks to smaller companies that invest solely in U.S. real estate.

The price of U.S. crude oil fell 7% to $66.67 a barrel on Thursday after U.S. President Donald Trump finalized his global tariff policy, which traders viewed as a threat to crude demand.

Fears of a global trade war that could weigh on international fuel markets are having a significant impact on WTI (West Texas Intermediate), the North American variety of crude oil, even though the White House stated yesterday that imports of oil, gas, and refined products were exempt from the new taxes.

Brent crude oil fell 6.7% to $69.92.

Immediately after the Republican leader's announcement, the value of major US oil companies, such as Exxon Mobil, Chevron, and ConocoPhillips, registered limited declines, but on Thursday, losses ranged between 3% and 5% for these companies.

The WTO estimates that these measures will contract global trade by 1% in 2025, but Latin America's ability to adapt will determine whether the crisis becomes an opportunity.