Fri, 25 Apr 2025

Fri, 25 Apr 2025 Could South America benefit from Trump's trade tariffs?

Countries in the continent may see exports rise as both the US and China need new suppliers.
South America's nations have received a surprise relief from US trade tariffs, with most receiving a 10% rate instead of higher rates initially announced by Donald Trump. Only Guyana and Venezuela were hit with higher rates of 38% and 15%, respectively, but these were later reduced to 10%. The move is seen as a win for South America, but experts caution that the continent's economies are still vulnerable to broader global trade instability. Some analysts argue that the US tariffs on China could create opportunities for South American exporters. Brazil, for example, could increase its agricultural exports to China, which has been buying more commodities from Brazil since Trump imposed tariffs on Chinese goods in his first term. However, others point out that the prices of these commodities are set globally and that the benefits may not be as significant as hoped. Other sectors in South America, such as beef and footwear, may also benefit from the US tariffs. Brazil's beef industry is hoping to increase exports to Japan after Tokyo shifted its buying habits following Trump's threats to hit Japan with 24% tariffs. Similarly, Brazilian coffee producers could gain a competitive edge over their Asian counterparts in the US market due to higher tariffs on Vietnamese and Indonesian coffee imports. However, experts also warn that the US tariffs could have negative consequences for South America's economies. The continent is heavily reliant on commodity exports, which may face reduced demand or price volatility as a result of the tariffs. Chile and Peru, which rely heavily on copper exports, are particularly vulnerable to this risk. Furthermore, Trump's aim is to boost domestic production in the US, not imports from other countries. If Brazil and Argentina do end up increasing their exports to the US, they may face higher tariffs in retaliation. Additionally, Trump may pressure Latin America to reduce China's footprint in the region in exchange for favourable treatment, which could have significant implications for South America's economies. In summary, while the reduction in trade tariffs is seen as a relief for South America, the continent's economies are still facing significant challenges and uncertainties resulting from the US-China trade tensions.
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