(Photo by GAP Photo Archive via Flickr/CC BY-NC 2.0)
As seen in the news with multiple twists and turns, the United States of America has come into conflict with Canada and Mexico over perceived injustices over trade deficits and drug trafficking. However, the two countries countered American tariffs, preventing the U.S. from gaining an advantage in negotiations. This situation is not likely to come to a firm victory for the Trump Administration. This roadblock may lead to the U.S. focusing on South American countries like Argentina, Brazil, and Colombia as an alternative target for the Trump administration to extract concessions and declare victory for supporters at home.
The three major countries of South America—Argentina, Brazil, and Colombia—have followed different paths to their current relationships with the U.S. All three countries have unique relations with the U.S., ranging from supportive to antagonistic towards the current American administration’s break from U.S. trade policies established in the 20th century. It could also start a shift away from the U.S. in South America due to unwarranted tariffs.
Argentine Ally
Of the three countries, Argentina is the most supportive of the U.S. administration, with the president of Argentina also supporting President Trump and right-hand man Elon Musk’s plans. This ideological alliance between leaders means they are unlikely to receive any targeted tariffs but could be affected by regional trade disputes with other South American countries.
Argentina and the U.S. leaders are ideologically aligned as they have met multiple times on good terms. However, they have pursued different policies to restore economic stability. Argentina has pursued free trade policies, such as entering a regional free trade pact with the EU and South American countries and devaluing the Argentine pesos to make Argentina more competitive in international trade.
In contrast, the U.S. wants to put tariffs on imports to the country. Thus, any regional tariffs the U.S. applies could indirectly affect Argentinian businesses if tariffs hurt the regional economy. Argentina could reportedly leave the South American-EU trade partnership to facilitate a U.S.-Argentina trade deal. Argentinian President Milei also declined an offer to join BRICS—a non-U.S. trade coalition composed of China, Russia, Brazil, South Africa, and India.
This decision may indicate that Argentina does not see its future with neighbours like Brazil and economic giants like China and India. The two leaders aligned in cutting social welfare programs, which diverged from the left-leaning Colombia and Brazil. Argentina and the U.S. represent two different economic plans for trade relations and inflation relief. This shows that both sides are willing to put differences aside to see their trade and monetary policies implemented.
Bad News from Brazil
Brazil and the U.S. may have a contentious relationship in the coming years because the former had a similar situation to the latter when it came to contested elections, causing major riots in the capitol to stop certification. However, Brazil took definitive measures to prosecute Bolsonaro, who claimed that the election was stolen from him in favour of the current president, Lula.
While tariffs are unlikely to pressure Brazil’s court system, the country could face hostility from the U.S. as Bolsanaro’s case progresses through the courts. However, Brazil’s association with China in BRICS may mean that the U.S. will see Brazil as a Chinese partner and will seek to punish China via Brazil through tariffs.
The global tariffs on steel and other metals are the main tariffs currently affecting Brazil. The Brazilian administration has yet to respond with equal tariffs on the U.S. Like other countries affected by the new tariffs, one of the government’s primary responses has been finding ways to support local industries.
In addition, Mexico and Brazil are trying to make their case for delaying tariffs with evidence of respecting the U.S.’s wishes during the first Trump administration. However, seeing Canada and Mexico’s success with equal tariffs on the U.S., Brazil may change its policies if the U.S. does not exempt them.
Conflict in Colombia
Colombia and the U.S. have had a historic relationship due to the U.S.’s involvement in the country to combat drug cartels in; as such, Colombia could be a target for tariffs if President Trump is convinced that the country is responsible for drugs coming into the U.S. In addition, it was the first target of tariffs due to its displeasure of the U.S. deporting Colombian nationals living in the U.S.
When threatened with tariffs and diplomatic breakdown, Colombia relented and allowed more deportees to arrive. The president has advocated for Colombians living in the U.S. to return home to work on improving their home country. Colombia, one of the closer allies of the U.S., was an avid trade partner and has shifted goals toward less reliance on the U.S.
This hostility from the U.S. means Colombia is reaching out to countries like China for better trade relations. This scenario raises a similarity between the first Trump administration and the current one, where tariffs on other countries only move company factories to other countries instead of back to the U.S. Colombia has signed onto the Belt and Road program with China, which invests in a country in exchange for renting or owning infrastructure like ports, rail lines, or roads.
However, this time, other countries are searching for trade partners to avoid U.S. tariffs, similar to how corporations moved factories to alternative countries to avoid U.S. tariffs on Chinese goods. As such, while the tariffs are impacting the global economy, the impact may not be what the U.S. administration desires.
South America at a Turning Point
As can be seen in the examples of countries in South America, the U.S. may fundamentally alter its relationship with its neighbours through the resulting tariff onslaught and changes in diplomatic protocol. Especially in Brazil and Colombia, this may make them see the U.S. as a country moving away from free trade policies, which could hurt U.S. citizens and businesses as the list of potential customers dwindles.
In addition, much like how the sanctions the U.S. has placed on countries worldwide have made other currencies more viable to avoid using the U.S. dollar, tariffs may make new trade relationships possible. In that case, it may result in a larger response from South American countries if the U.S.’s demands are unrealistic.
With both the EU and China making maneuvers in South America, potential political tariffs placed by the U.S. could unite unlikely allies to retaliate on these tariffs.
Edited by Gustavo Villela
