Tariff trouble brewing for Latin America in US-China trade war

Chinese investments in key sectors of Latin America's economy – such as port infrastructure, green energy and critical minerals – could serve as grounds for potential US tariffs or other retaliatory measures, and this possibility extends beyond the Donald Trump administration, according to Kellie Meiman, senior counselor at McLarty Associates.

"We have already seen proposals by the president's special adviser for Latin America, Mauricio Claver-Carone, that 60% will be the tariff applied to goods entering the US if they have gone through Chinese-owned ports," Meiman, who has also served as a foreign service officer for the US Department of State in Latin America, replied to a question from BNamericas during a webinar.

Following widespread panic over tariffs announced last week, Trump partially scaled back his new trade war, reducing all announced tariffs to 10%, while raising the rate on Chinese goods to 125%.

Although it remains to be seen how measures targeting Chinese capital in Latin America will unfold, the proposal to impose tariffs on goods traded through Chinese-owned ports is a clear signal, Meiman added.

She noted that similar trends could be observed during the Joe Biden administration, particularly in relation to green energy and industrial policy included in the Inflation Reduction Act.

That legislation contained provisions aimed at supporting US manufacturers of green technologies in the energy and automotive sectors, in order to boost competitiveness in key areas where China is a dominant player.

However, Meiman stressed that the US will still rely on critical minerals from Latin America.

"Chile and the Americas can be part of that solution, but only if we're able to navigate how the US handles Chinese capital in that equation," she said during the event hosted by the Chile Pacific Foundation, an organization tasked with encouraging Chile's projection toward the Asia Pacific region and hosting the country's APEC Business Advisory Council (ABAC). 

Beyond trade, China has expanded its influence in Latin America through investments in infrastructure, energy, mining, telecommunications and other sectors, further fueling US concerns.

"On the Democrat side there's concern about Chinese investment. There's concern about the source of the capital that's getting copper out of the ground," Meiman said.

She warned that even a 10% tariff could be very damaging for trade-dependent countries, especially those with which the US has free trade agreements.