'Trump sees Latin America as a problem, not an opportunity'

Although Donald Trump will not be sworn in as US president until January 20, his threats to impose tariffs and order mass deportations are causing a stir in the rest of the world, especially in Latin America.

The rivalry between Beijing and Washington, which is expected to heat up under Trump, has also been evident during Joe Biden's administration in the face of the Asian giant's growing incursions into several key sectors of the Latin American economy.

To learn more about how this confrontation will affect the region and its relationship with both countries, BNamericas speaks with David Castrillón-Kerrigan, a research professor at Colombia’s Universidad Externado who is an expert in US-China relations.

BNamericas: Do you expect the next US administration to try to counter China's influence in Latin America?

Castrillón-Kerrigan: Few issues unite Americans on both sides of the political spectrum as much as their animosity toward China. So we expect the incoming Trump administration to at least assume a competitive stance toward Beijing, if not raise the temperature of an already tense relationship.

After all, it was Trump who, in his first term as president, first singled out China as a “revisionist power” that “endangers the American way of life.” At the time, members of his cabinet argued in favor of political regime change in China. His administration was also insistent on the need to “combat the unwanted influence of extracontinental powers” in Latin America and the Caribbean.

In Trump’s second term, with conservative figures such as Marco Rubio in the president's inner circle, it is expected that the dual strategy of competing and negotiating with China at a global level will continue, while using the entire toolbox at Washington's disposal to pressure Latin American and Caribbean countries to keep China at a distance.

However, just as it was eight years ago, this strategy will bear little fruit. An effective strategy would have both sticks and carrots. However, neither Trump's nor Biden's US was able to create the necessary incentives for the countries in the region. This, coupled with Trump's racist, xenophobic and unilateralist rhetoric, will move the region to advance as far as possible towards its integration and more diversified foreign policies.

BNamericas: How would a new tariff war between Washington and Beijing affect the region's economies?

Castrillón-Kerrigan: In a tariff war, everyone loses. The last eight years of the US trade war with China are a recent example of this, with American consumers being the biggest losers.

But there are nuances that must be acknowledged. I would like to mention three of them. First, an intensification of trade competition between the two largest economies in the world will inject a dose of uncertainty into global markets. This will have various harmful effects, including greater volatility in foreign exchange markets and incentives for global capital to seek safer markets, increasing the cost of access to credit for countries in the region.

This future scenario could become even darker as Trump expands his protectionist policy to other markets, as he indicated a few days ago with his promise to increase tariffs on imports from Canada and Mexico.

Second, it is possible that, with the increase in the cost of Chinese imports, there will be a nearshoring effect, in which companies that currently produce in China move part of their production to other markets, such as Latin America. However, the experience of the past eight years shows that this should not be taken for granted. Although steps have been taken towards a diversification of global production chains that reduce dependence on China, these steps have been timid, and in many cases have benefited other countries more, such as Vietnam.

Trump has also insisted that his goal is to revitalize American industry, not to benefit that of other nearby countries. His recent threats against Mexico, where Chinese companies have moved part of their production, are part of this story.

Finally, in response to the protectionist threat from the US, China has responded by opening up its market further. At the recent G20 summit in Brazil, [President] Xi Jinping again repeated his promise to eliminate tariffs on imports from less developed countries. The country has also made progress on its promise to increase imports of high value-added goods from the Global South, which it has fulfilled by modernizing existing free trade agreements, as occurred a few years ago with the Chile-China FTA, and through events such as the International Import Expo in Shanghai.

In the end, what is expected is a mixed future scenario, with more dark tones than light ones for countries in our region.

BNamericas: It was recently reported that the US would be interested in supporting companies from its country to participate in the construction of a large-scale port in Chile to compete with the Chancay terminal in Peru, which is financed by China. Given that these are long-term projects, would this be a feasible option for the US?

Castrillón-Kerrigan: No, it's very unlikely that this will happen. There are at least two reasons for reaching this conclusion. On the one hand, because Washington doesn't have the capacity or the interest to take the necessary measures to generate incentives for American companies to participate in this type of project.

Such measures would have to be approved by the US congress, which, while it will be under Republican control in the short term, has other priorities, most of them domestic. It's unthinkable that, in the face of Trump's message of putting the US first, the majorities in congress would decide to approve money to finance infrastructure projects on distant shores.

The second reason has to do precisely with the companies that would carry out these projects. Why spend efforts on projects in foreign countries when there are projects that are perceived as safer and even larger in scale in the US? Under Biden, there was already a wave of infrastructure revitalization projects on American soil, driven in part by measures such as the Infrastructure Act and the Inflation Reduction Act.

Under Trump, one would expect to see more of these types of projects, which, combined with the conditions of economic volatility mentioned above, would motivate companies to stay home.

BNamericas: Do you think Trump's foreign policy could make China more attractive to Latin America?

Castrillón-Kerrigan: Latin America and the Caribbean's rapprochement with China is part of structural trends that will continue regardless of who is in the White House.

China’s discourse on transition to a multipolar order, its actions in the interests of the Global South, and its implementation of programs such as the Belt and Road Initiative and the Global Development Initiative make China an attractive partner. Moreover, the past two decades of the region's relations with China have been generally positive. This creates confidence that it's better to work with Beijing than not to.

But there is certainly a Trump effect that also acts on these trends. Trump sees Latin America as a problem, not an opportunity. And the memory of his actions in his first administration weighs heavily on the shoulders of decision-makers in Latin America and the Caribbean.

This time, with his return to Washington, we expect more of the same, even more than what was seen eight years ago. The mass deportation of migrants, the unilateral imposition of tariffs, the possible renegotiation of trade agreements, the intervention in the domestic politics of left-wing governments. All of these are actions that, with good reason, overwhelm those who lead the region and accelerate their desire to reduce their vulnerabilities towards the United States.

Faced with this situation, China presents itself as a safe haven in which to anchor the region while the Trump storm passes. If it ever passes.