Could South America Truly Benefit from Trump's New Trade Tariffs?
When Donald Trump announced new trade tariffs on global imports, South American countries had a moment of relief.
Out of the 12 South American nations, 10 were only subjected to a relatively low 10% tariff. Guyana and Venezuela initially faced harsher rates of 38% and 15%, respectively, before these were reduced to 10% as Trump temporarily suspended elevated rates for most countries for 90 days.
Meanwhile, China faces a hefty 145% tariff, while Canada and Mexico deal with 25% on some products.
Some commentators see this as a major opportunity for South America, suggesting that higher U.S. tariffs on China, Canada, and Mexico could make South American goods more attractive. However, this view overlooks the broader instability now affecting global trade — which could also harm South America.
South America is rich in resources, particularly agricultural goods like soybeans and oil, with Brazil and Argentina being key players. The U.S.-China trade war might open new opportunities — for instance, Brazil could expand soybean exports to China, just as it did during Trump’s first term.
Frederico D'Avila, a Brazilian farmer and former politician, recalls that Trump’s first presidency was “excellent for Brazilian agriculture.”
However, Juan Carlos Hallak, an international economics professor, warns that changing who buys your goods doesn’t necessarily mean greater profits, since commodity prices are set globally. The real risks lie in overall economic slowdowns that could drive prices lower.
Other industries across South America — from beef to coffee to footwear — are also watching closely. Brazil, the world's largest coffee producer, could benefit if U.S. tariffs on Vietnam and Indonesia are reinstated, making their coffee beans more expensive. Similarly, Brazilian footwear could gain ground in the U.S. if Asian imports become pricier.
Uruguay’s President Yamandú Orsi even suggested that Trump's trade moves might push Europe closer to finalizing a trade deal with South America’s Mercosur bloc.
Yet, there are significant risks. Even a 10% tariff could weaken U.S. demand. Meanwhile, metals like aluminum and steel from Brazil and Argentina now face a 25% tariff, threatening these sectors.
Commodity price volatility caused by Trump's trade policies could also hurt economies like Chile and Peru, which rely heavily on copper exports.
Former Argentine central banker Eduardo Levy Yeyati warns that if South American exports to the U.S. or China surge, Trump could retaliate with harsher tariffs. Trump’s priority remains protecting U.S. domestic industries, not boosting foreign economies.
Moreover, Trump might pressure Latin American countries to curb Chinese investment in the region, risking diplomatic and economic tensions.
Thus, labeling Trump’s tariffs a simple "win" or "loss" for South America misses the complexity of the situation.
As Professor Hallak concludes: “It’s very hard to predict where this will lead.”