U.S. Tariffs Hit Latin America Hard—China's Policy Response May Matter Even More

U.S. tariffs have created a mixed impact across Latin America, with Mexico and Central American countries facing the highest effective tariff rates due to their export profiles and reliance on the U.S. market. However, the authors argue that South American nations are more vulnerable to indirect spillovers from China, which is now the primary trading partner for most of the subregion. A slowdown in Chinese demand for minerals, metals, and energy products, driven by high U.S. tariffs on China, could depress regional growth and commodity prices if China fails to implement effective countercyclical fiscal and monetary policies.

• Effective tariff rates (ETRs) differ significantly from announced rates due to product exemptions. Mexico's ETR is lower than the 25% "fentanyl tariff" because nearly half of its exports to the U.S. are exempt under the USMCA. Brazil and most Central American countries (including Honduras, Nicaragua, the Dominican Republic, El Salvador, and Guatemala) face ETRs above 10%, largely driven by exports of steel, aluminum, and auto parts.
• Certain Latin American and Caribbean countries face ETRs below 10% due to specific commodity exemptions. Bolivia, Ecuador, Colombia, and Chile benefit from exemptions on tin, oil, and copper. Guyana and Venezuela have the lowest new effective tariffs because oil, which comprises 90% and 95% of their U.S. exports respectively, is exempt.
• South America is more exposed to Chinese economic volatility than to U.S. trade disruptions. By 2024, China's share of South America's total exports reached approximately 28%, compared to 16% for the United States. This is particularly evident in the minerals and energy sectors; for example, China consumed over 50% of Chile's non-precious mineral exports in 2023 and 44.9% of mining exports from Argentina's Northwestern provinces in the first 11 months of 2024.
• China's ability to mitigate the impact of U.S. tariffs—which have an estimated effective rate of 32.2%—depends on fiscal and monetary responses. Fiscal stimulus is constrained by a public debt-to-GDP ratio of 100% and a reliance on land sales. Monetary policy is limited by low profit margins in local banks caused by previous government pressure to lower lending rates to address the property market crisis.

APA

Rojas-Suarez, L., & Albe, I. (2025). U.S. Tariffs Hit Latin America Hard—China's Policy Response May Matter Even More. International Institute for Sustainable Development. https://www.iisd.org/articles/policy-analysis/us-tariffs-latin-america-china-policy-response

Chicago

Rojas-Suarez, Liliana, and Ignacio Albe. U.S. Tariffs Hit Latin America Hard—China's Policy Response May Matter Even More. International Institute for Sustainable Development, 2025. https://www.iisd.org/articles/policy-analysis/us-tariffs-latin-america-china-policy-response.

Wikipedia

{{cite report |last1=Rojas-Suarez |first1=Liliana |last2=Albe |first2=Ignacio |title=U.S. Tariffs Hit Latin America Hard—China's Policy Response May Matter Even More |publisher=International Institute for Sustainable Development |date=28 July 2025 |url=https://www.iisd.org/articles/policy-analysis/us-tariffs-latin-america-china-policy-response |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rojassuarez2025tariffs, author = {Rojas-Suarez, Liliana and Albe, Ignacio}, title = {{U.S. Tariffs Hit Latin America Hard—China's Policy Response May Matter Even More}}, institution = {International Institute for Sustainable Development}, year = {2025}, month = jul, url = {https://www.iisd.org/articles/policy-analysis/us-tariffs-latin-america-china-policy-response}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }