The past year has been a roller coaster for international trade, defined by tariffs, court rulings, court orders in response, and overall unpredictability and uncertainty.
Amid these ever-changing developments, there’s one overarching trend for businesses to watch, especially those focused on Latin America: U.S.-China relations.
The evolving trade war between these two superpowers is impacting the region in many ways.
“Both China and the U.S. are playing for keeps, and Latin America sits at the heart of this new global game,” according to Florida-based research firm Americas Market Intelligence. “The decisions made today about supply chain routes, investment destinations, and trade partnerships will reverberate for decades to come.”
China recommits to Latin American investment
We’ve written extensively about China’s presence and influence in Latin America. It’s broad-reaching and expansive, with free trade agreements across the region (Chile, Costa Rica, Ecuador, Peru, and Nicaragua), ample and flexible loans, and billions invested in mining, agriculture, technology, and infrastructure.
Economic issues at home in 2024 brought a focus on domestic priorities, along with reports of reduced infrastructure investment abroad. One year later, however, this picture has changed. As tensions with the U.S. increase, we’re seeing this downshift reverse—and China intensify its focus.
In May, China hosted Latin American and Caribbean officials at the China-CELAC Forum, announcing plans to disburse billions in credit and sharing the news that Chinese companies have been encouraged to boost their investments in the region.
We’ve been seeing examples of the latter. In Brazil, state-owned Baiyin Nonferrous Group completed its purchase of the Mineração Vale Verde copper and gold mine in the northeast. In Iracemápolis near São Paulo, Great Wall Motor Company is ramping up its factory production.
Many Latin American leaders are returning the enthusiasm.
Brazil’s President Luiz Inácio Lula da Silva made a state visit to Beijing in May. “We want to learn and to attract more investment to Brazil as well. We want more railways, more subways, more technology. We want artificial intelligence,” he said.
In May, Colombia became the latest Latin American nation to join the Belt and Road Initiative (BRI). “The signing of this cooperation plan opens up a horizon of endless opportunities in trade, investment, and tourism,” Colombia’s foreign minister Laura Sarabia declared.
Latin American logistics in the spotlight
U.S.-China relations are having a big impact on shipping and logistics in Latin America, starting with the 51-mile canal that makes Panama a pivotal player in the global shipping world and puts the nation in the center of a great power competition.
In 2017, Panama joined the BRI. Chinese pledges to fund new infrastructure projects, including a new railway and Pacific cruise terminal, soon followed. Fast forward to 2025: Many of these projects have been cancelled or postponed, and the government announced plans for a BRI exit.
Meanwhile, New York-based BlackRock had an announcement of its own. The global investment giant agreed to buy more than 40 port facilities worldwide, including the Balboa and Cristobal ports at either end of the Panama Canal, from Hong Kong’s CK Hutchison Holdings.
As this all plays out—including Bejing’s review and criticism of the multi-billion-dollar deal—a new BRI-funded megaport to the south is making waves of its own.
With the Port of Chancey, 23-day direct shipping between Peru and Guangzhou, South China’s biggest hub, is now possible, with ripple effects on trade routes throughout Latin America. The Port of Chancey expedites connections between China and major ports in Mexico and Chile, and Brazil announced plans for a major rail link to the facility.
With these new trade routes, look ahead to increased trade.
“The route is anticipated to boost exports of household appliances, electronic products, furniture, and toys to Latin America, writes Swiss global transport and logistics firm Kuehne Nagal. “Conversely, high-quality fruits, seafood from the Pacific coast, and red wine from the Andes will reach China more swiftly.”
China’s interest in Latin America’s transportation infrastructure extends to the skies and land as well. Recent investments include modernization, maintenance and operations of six airports in Colombia and renovation of the main airport in oil-rich Guyana. And Colombia’s new BRI membership brings talk of China’s New Development Bank funding a canal or railway connecting this nation’s Atlantic and Pacific coasts.
Opportunity and risk in the semiconductor sector
Semiconductors run our modern world, enabling everything from AI to auto manufacturing. The U.S.-China trade war impacts their availability throughout the supply chain.
As China employs export controls to restrict the minerals used in semiconductor manufacturing, the U.S. has banned the sale of products like chip design software to its rival superpower. The New York Times covered this situation in May. “The new limits are pushing the world’s largest economies a step closer toward supply chain warfare, as Washington and Beijing try to flex their power over essential economic components in an attempt to gain the upper hand.”
Could Latin America gain its own advantage amid this global battle?
Possibly. Semiconductor manufacturing is growing in Brazil thanks to government backing, capacity expansion, and private sector investment, and Mexico has identified hubs across the nation for the development of its own semiconductor industry. This “hot commodity,” Americas Market Intelligence declares, “will reshape supply chains.”
Yet caveats exist with this forecast as well. “This diversification away from China presents both opportunities and risks for Latin American logistics,” Americas Market Intelligence also points out. Shortages and supply chain delays due to export controls will hinder progress in many more industries.
Meeting the need for rare earth minerals
Semiconductors depend on rare earth minerals, as do many aspects of modern life: smart phones, computers, TVs, LED lights, clean energy, defense technologies, and beyond. This may be another avenue of opportunity for Latin America in the current trade climate.
China has been a leading producer and refiner of rare earth elements (REEs), and the United States has relied on Chinese imports for many of its needs—until now. In April, China imposed export restrictions on several types of REEs. Even as the Chinese government issues some export licenses for shipments, supplies remain scare for factories worldwide.
Will Latin American mining come to the rescue?
“The Western Hemisphere, with its impressive mineral reserves, is poised to play a key role in any effort to de-risk mineral supply chains,” according to the Center for Strategic and International Studies.
Dysprosium and terbium are among the REEs subject to Chinese export controls and are used in lasers, aerospace alloys, data storage, and fiber optics. In May, Australian company Viridis Mining and Metals announced the delivery of these and other REEs in high-purity form.
This extraction took place in Brazil, which is estimated to have around one-fifth of the world’s rare mineral reserves—and much untapped potential for bringing them to market.
“The restrictions imposed by China are expected to benefit advances of projects in Brazil, as the US itself will seek more secure geographies to meet its needs – even if these measures are eventually lifted,” Valdir Farias, CEO of mining consultancy Fioito, told BNamericas in April.
In other areas of South America, Argentina is exploring REE deposits in its northwestern Jujuy province, local geologists have identified nine REEs in Peru, and Chile has announced an initiative to promote the extraction of strategic minerals, including REEs, from mining waste.
Ripple effects for EVs and innovation
In addition to writing about Latin America’s mining sector, we’ve also taken a look at the electric vehicles (EV), from the lithium batteries that power EVs to entrepreneurs like Bolivia’s Quantum Motors.
The market is already changing in countries like Argentina, where the Milei administration has been lifting import tariffs on popular products like mobile phones and electric vehicles. “This year should finally be the one when electric vehicles take off in Argentina,” according to Carlos Cristófalo from the automotive outlet Motor1 Argentina. “We’ve finally secured a clear regulatory framework.”
This opens the door to Chinese EV brands like BYD, with mixed repercussions. Consumers in the market for electric cars will finally have more affordable options. But Argentine automakers like Coradir, manufacturer of the 100% locally produced Tito, will suffer from the increased competition.
Will Latin America’s roads be filled with Dolphin Minis or Teslas in the future? The world’s two superpowers are taking vastly different approaches to EV development.
In the United States, legislation is pending that would repeal EV tax credits and restrict foreign sourcing and technology collaboration, along with production incentives for manufacturers. China, by contrast, is leveraging state support, strong supply chains and a competitive domestic market to grow its EV sector.
According to some perspectives, leadership in areas beyond the EV market is at stake.
“The risk for the U.S. is that these advantages will soon also allow China to dominate industries such as generative AI, quantum computing, and humanoid robotics,” Charlie Campbell from Time’s Singapore bureau writes. “And EVs are front and center to those goals.”
A welcome boost for Latin American commodities
Finally, 2025 could represent a fortuitous convergence of forces for Latin American agriculture. As crops rebounded after record heat, floods, and drought, U.S.-China tensions expanded the markets for these goods.
“China is shifting purchases of agricultural commodities to Latin America amid its escalating trade war with the United States,” the Council for Foreign Relations reported in April. Meat, corn, and fruit exports to China from Chile, Uruguay, and Peru have surged, and Argentina, Paraguay, and Uruguay are also seeing a boost as China seeks out alternative cereal suppliers.
Shifts in “the soybean triangle” may highlight this trend most dramatically. As China accounts for roughly 60% of the world’s soybean imports and United States and Brazil account for roughly 80% of the world’s soybean exports, it’s a dynamic to watch.
U.S. soybean exports to China fell over 40% from first quarter 2024 to first quarter 2025. In the meantime, China—which started purchasing more of its soybeans from Brazil during the first Trump administration—doubled down even more during Trump 2.0. In fact, Marine News Magazine reported in April, “China will likely meet its entire demand in the coming months from Brazil, which is expected to have a record crop this year.”
Brazil isn’t the only nation finding growth in a changing world right now. We profiled Uruguay a few years ago, and if you’re involved in the agricultural sector, you may want to put this nation on your radar. In May, Uruguay signed an agreement with China that includes exports of soybean and rapeseed meal and research for farming and cattle production—and talks are on the horizon for possibilities in soybean byproducts, along with processed meat and dairy products.
Ready to navigate the U.S.-China trade winds to your next Latin American business opportunity? Specialized consultants who know the market can help. For more information, contact us.