As we write this, it’s October 2024. The United States is on the cusp of a decision: make its current vice president the first woman to hold this top executive role or Make America Great Again again.
Whatever happens (or happened, if you’re reading this blog after the dust has settled), one thing is clear: a new occupant in the White House will have ripple effects on trade, investment, and beyond throughout the Western Hemisphere for years to come.
The specific positions of any potential 2024-2028 administration are difficult to predict. Will Trump 2.0 be a repeat of Donald Trump’s policies during his 2016-2020 term, or a radical departure? Will Kamala Harris build on the choices made by President Joe Biden, or chart her own path? As the events leading up to this electoral contest have demonstrated, anything can—and often does—happen when it comes to presidential politics.
To read the tea leaves, we’ve explored comparisons, contrasts, coverage, and conversations related to Trump and Harris over the past several months, plus provided some historical context. And we’ve identified five priority areas to watch for Latin American business strategy, into 2025 and beyond: programs for private investment, border and immigration policies, tariffs, and trade agreements, along with China—the global superpower behind many of today’s economic and political moves.
It’s not a crystal ball, but it’s a good place to start.
Programs for private investment
As we explored foreign direct investment programs benefit private companies by opening up new markets, and help out recipient countries by developing the local workforce, infrastructure, and economy, often with a spotlight on technological innovation.
Which initiatives will launch, return, or continue over the next four years? Which regions and industries will they focus on?
In 2018, then-President Trump introduced the América Crece program. With entirely intentional similarities to China’s Belt and Road initiative, it posed the ambitious goal of jumpstarting $1 trillion in energy and infrastructure investments in Latin America and the Caribbean by removing structural, regulatory, legal, and market barriers for project developers and financiers.
The program catalyzed billions in investment: for energy projects in Panama, for commitments toward El Salvador’s first integrated LNG import terminal, and for a private capital-focused bridge financing facility to support state-owned enterprises in Ecuador.
2018 also marked the creation of the US International Development Finance Corporation (DFC), an organization that “brings together the capabilities of OPIC and USAID’s Development Credit Authority, while introducing new and innovative financial products to better bring private capital to the developing world.” The DFC has been active and impactful through both the Trump and Biden presidencies, with highlights that include small business lending in Dominican Republic, critical mineral mining in Brazil, and port modernization in Ecuador.
The DFC is up for reauthorization in 2025, but legislation is pending—not only to extend the program for another seven years, but also to significantly boost its investment power and expand the nations in which it operates.
Kamala Harris has also implemented programs related to private sector investment in Latin America, despite acting with the far narrower powers of the vice presidency. Her main initiative in this area—indeed, her main initiative related to Latin America as vice president—has been Central America Forward. Since 2021, companies have worked through the program to commit over $5.1 billion to steel production, electric power transmission, and an industrial park in Guatemala, as well as youth and small business/entrepreneur training in El Salvador, Guatemala, and Honduras.
Border and immigration policy
Beyond economic development, Central America Forward has another aim: addressing the root causes that push millions of the region’s residents to seek a new life in the United States.
The program has made strides toward this goal. Since its inception, Central America Forward investments have generated more than 70,000 new jobs across Guatemala, Honduras, and El Salvador, according to a White House report, which also noted positive developments in digital access, agricultural capacity, skill-building, and financial inclusion.
Amid outcomes like these, there’s another trend to watch: Fewer people moving northwards means fewer people sending money back to their families and home communities. When these remittances number in the billions and account for a double-digit percentage of a nation’s GDP, any decline can have huge impacts on purchasing power, public services, entrepreneurship, infrastructure, and more.
The U.S. is the largest source of remittances for Latin American countries, according to the Economist Intelligence Unit, which notes that tighter U.S. immigration and border policies “will have global spillovers.”
How tight will new border and immigration policies be? Which nations will be most affected? How will the mood of the American people and global trends ameliorate or exacerbate the effects? As these events unfold, watch closely for the ripple effects and repercussions.
Tariffs
One of the ways a U.S. presidential administration affects businesses in Latin America most directly is by modifying the cost of the supplies a company imports and the prices of the products they sell abroad—and the impact can be huge on big-ticket, high-tech products like automobiles.
Trump’s name became synonymous with tariffs during his 2016-2020 presidency, when he imposed several and threatened even more. Many are bracing themselves for a return scenario. The EIU’s Trump Risk Index, for example, gives Mexico a 71.1 risk ranking on a scale from 0 to 100 due to its exposure in this area. Indeed, Trump’s election to office in 2016 sent the Mexican peso down nearly 8% in just a week.
Should vulnerable industries and nations expect more of the same in 2024-2028?
It’s hard to say. Politically, Trump gained some early benefit from his policies as residents of regions more exposed to import tariffs became less likely to identify as Democrats and more likely to vote for Republicans. But with reelection a much-reduced concern for a second-term administration, that calculus may no longer apply.
Furthermore, with several years of impact and analysis behind us, reviews of these tariffs have been mixed. Harris’ running mate Tim Walz is an outspoken critic, noting that Trump’s tariffs hurt farmers and the agricultural sector in his rural state of Minnesota. “Many firms listed how the tariffs have led to a decrease in wages and employment, as well as less investment in domestic research and development (R&D),” the Council of Foreign Relations reported.
Will Trump’s second-administration tariff policies match his fiery campaign rhetoric, and would a Democratic presidency offer the polar opposite? The answer is less clear-cut than one might expect. While Harris has condemned tariffs under Trump as “a tax on working families,” other Democratic leaders are touting them as a way to shore up domestic manufacturing.
“The politics of tariffs are complicated,” NBC News concluded in its Decision 2024 coverage—and we couldn’t agree more.
Trade
Trade agreements shape investments, supply chains, and global economies. The nation’s chief executive is of course highly influential in setting trade policy, and in the U.S. both parties have retreated from some trade agreements in recent years. Trump removed the United States from the Trans-Pacific Partnership in 2017. Biden’s approach, meanwhile, has been referred to as “no trade policy, no-trade policy or both.”
Will the bipartisan America’s Trade and Investment Act, currently a bill, expand Western Hemisphere trade and bring tariff reform and private investment? Will the Central American Free Trade Agreement be reimagined and renegotiated? And what about the Caribbean Basin Trade Partnership Act, due to expire in September 2030?
We anticipate that the most immediate activity will happen with NAFTA’s successor and replacement: the United States-Mexico-Canada Agreement (USMCA). When it’s up for review and renewal in 2026, the new president will play a pivotal role in determining its fate. What’s at stake? Intellectual property, pharmaceutical regulation and production, labor issues, the environment, and more, along with reshoring and investment incentives for the .
“This process will be a learning experience for all three parties, as there is nothing quite like it elsewhere in international trade agreements,” writes Simon Lester, a nonresident fellow with the Baker Institute for Public Policy.
What will trade agreements look like under Harris’ leadership? In her 2016 Senate campaign, Harris expressed her opposition to the TPP, and in 2020, she was only one of 10 senators to vote against the USCMA, although her reasons for opposition involved a desire for stricter environmental and worker protections.
As for Trump’s approach to trade agreements: “Veterans of Trump’s first term insist that they successfully used anti-trade actions, from raising tariffs to disabling the World Trade Organization, as leverage to get new or revised trade deals across the finish line,” pre-election coverage by Politico declared. “Many trading partners expect that strategy would be supercharged in a second Trump administration.”
In these one-to-one dealings, which nations stand to prosper?
That’s a question of both politics and economics. Early in his presidency, Trump met with the leaders of Brazil, Colombia, and Peru. Today, this roster includes Nayib Bukele of El Salvador, Chilean President Gabriel Boric’s opponent Jose Antonio Kast, and Javier Milei of Argentina and is extending into the worlds of technology and finance, with former venture capitalist J.D. Vance on the Republican ticket as Trump’s running mate and SpaceX/Tesla CEO Elon Musk talked about to lead a commission on government efficiency.
But Trump’s stance toward a nation can swiftly and dramatically change, as Bukele and El Salvador experienced earlier this year. And Jorge Heine, Chile’s former ambassador to China, cautions against too much optimism. “Leaders seen as ideological allies of Trump,” he wrote in a detailed September analysis of the situation, “should expect invitations to the White House and other expressions of good will, though not necessarily any preferential market access.”
Speaking of China…
Through the Belt and Road Initiative and other large-scale projects, China has made its influence felt across Latin America and the world overall. Trump has been famously adversarial toward the Asian superpower, imposing tariffs that didn’t always have the hoped-for impact—but that have not all been overturned with the shift to a Democratic administration.
“Notably, President Biden has maintained tariffs on billions of dollars of Chinese imports dating to the Trump administration, all while maintaining a flawed process of granting tariff exclusions to select industries,” the Council of Foreign Relations blog pointed out.
For many companies, this has brought “difficulty in sourcing alternative inputs, the added challenges posed by retaliatory tariffs from China, and the lack of concrete change to China’s behavior since the tariffs’ implementation,” CFR reported in its retrospective analysis. “The costs are varied but significant.”
What lies ahead for global supply chains and the millions of people and businesses impacted by these trends? Heine, in his forecast for Latin America, writes of “a double whammy if reduced trade with the US is accompanied by declining Chinese demand for South American raw materials.”
In conclusion
While Harris vs. Trump has dominated headlines and boardroom discussions, it’s important to note the U.S. isn’t the only nation that’s experiencing a change in leadership. This time last year brought Javier Milei’s election to Argentina’s top office. Panama—home of one of the world’s most consequential conduits of trade—recently elected a new leader in Jose Raul Molino. “Panama’s new president means new China policy,” declared the headline of one recent article. And on October 1, environmental scientist and former Mexico City mayor Claudia Sheinbaum assumed the office of president in Mexico.
In Buenos Aires, Mexico City, Panama City, Washington, DC, and beyond, new leadership brings new opportunities—and new complexities. When the only certain is change, the best strategy is to try to stay informed, prepared, and ready for business.
As the landscape evolves, specialized consultants can help you navigate the challenges, opportunities, and complexities. For more information, contact us.