Donald Trump is advancing his trade war by trying to reduce China's influence in Latin America, a region the United States has long considered a zone of direct influence. The success of this effort will likely be related to each country's dependence on his economic power, which could result in a divide between those closest to its borders and those further south, according to Christopher Garman, managing director of the political risk consultancy Eurasia Group. Mexico and Central America, and to a lesser extent Colombia—Washington's closest South American ally—are "wedded to the U.S.," the analyst says. However, it will likely be more difficult to influence the larger nations of South America, reports Bloomberg Línea.

It is worth noting that China has been gaining ground in the region's trade, as evidenced by the fact that in 2023, the value of total trade with Brazil was US$178,7 million vs. Brazil's US$79,8 million. The outlook is similar in other countries in the region: Chile US$62,8 million (US$32,6 million); Peru US$40,5 million (US$21,1 million); Argentina US$21,2 million (US$15 million); Uruguay US$4,7 million (US$2,1 million). In the case of Colombia, the US reached US$32,3 million, while China reached US$20 million.

In an attempt to increase his influence in the region, Trump sent Defense Secretary Pete Hegseth to Panama as part of his strategy to reassert US dominance over the canal. On Monday, April 14, he hosted El Salvadoran President Nayib Bukele, a close ally, at the White House. Treasury Secretary Scott Bessent visited Buenos Aires, where he reiterated the US's desire for Argentina to end its dependence on Chinese financing, a strategy the Asian country has consistently used to gain influence in Latin America.

China's relationship with Brazil and Argentina 

Trade between Brazil and China has grown steadily under current President Luiz Inácio Lula da Silva and his right-wing predecessor, Jair Bolsonaro. Flows totaled some US$158.000 billion last year, nearly double the amount with the U.S. And following Trump's tariff announcements, China immediately began increasing its purchases of Brazilian soybeans.

Meanwhile, Argentine President Javier Milei, who has positioned himself as the most pro-Trump leader on the continent, has also adopted a more cordial tone toward China since taking office. Milei called China a “great trading partner” and pledged to “deepen the trade relationship” between the two countries in a January interview.

Milei has sought to strengthen ties with the US and Trump, even proposing to launch a free trade agreement between the two nations. But China is currently Argentina's second-largest trading partner, surpassed only by its neighbor Brazil, and Milei's pragmatism likely reflects her understanding that she cannot completely turn her back on Beijing.

Dominance in the region 

China established a strategic position in the Americas at the beginning of this century, absorbing raw materials from resource-rich South America and investing so much money in the region that it supplanted the United States as the continent's main trading partner. It also expanded its influence through the Belt and Road Initiative, its flagship economic development program, which more than a dozen Latin American countries have joined.

 Chinese companies thus took on megaprojects such as the metro in the Colombian capital of Bogotá and the recently completed port of Chancay in Peru. Beijing also gained support by distributing aid and medical supplies when Latin America was devastated by Covid-19.

As a result, the escalating battle between the world's two largest economies has left governments from Mexico to Argentina grappling with the reality that their days of doing big business with Beijing without a serious backlash from Washington are numbered, a shift that threatens to force them to choose sides.

US measures 

Since returning to office, Trump has taken steps that could jeopardize Chinese influence in the region. The U.S. announced secondary tariffs on countries that buy oil from Venezuela, whose largest buyer is China. And a group of investors led by BlackRock (BLK) said last month it would buy ports at both ends of the Panama Canal controlled by CK Hutchison Holdings, a Hong Kong conglomerate. And while Beijing has tried to delay the sale of ports in Panama, it is unlikely to try to intimidate its neighbors, said Michael Hirson, head of China research at 22V Research in New York.

But the US strategy is risky, considering that Latin America is a region where China still favors a friendlier approach. Indeed, during the economic summits held in Peru (APEC) and Brazil (G20) last year, Chinese President Xi Jinping described his country as a champion of economic globalization.