Latin American Countries Feel Relief as They Are Relatively Unscathed by Liberation Day
Latin American countries are quietly breathing a sigh of relief that President Donald Trump's Liberation Day tariffs are focused primarily on other parts of the world, which may even give the region a comparative advantage.
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Latin America is "much better off relatively than other regions around the world, with most countries" receiving just the baseline tariff rate of 10%, said Jason Marczak, vice president and senior adviser at the Atlantic Council. He was speaking at an event hosted by the Atlantic Council's Adrienne Arsht Latin America Center, in collaboration with the GeoEconomics Center.
Enrique Millán-Mejía, a senior fellow at the Atlantic Council, said that Latin America emerged unscathed because Trump's tariffs were calculated based on trade surpluses and it's the U.S. that has a "an important trade surplus with most countries in Latin America and the Caribbean." The trade is also largely balanced, he said, with the U.S. selling "heavy manufacturing products, tech products, innovative products and agricultural products that are key raw materials for Latin American industries," while "Latin America sells mainly commodities, agricultural products and light manufacturing."
He noted that Mexican agricultural products won't be subject to the 10% tariff rate and that Mexican produce exports, "which compete with Latin American exports in the U.S., will remain tariff-free."
This likely contributes to the "sort of relief" felt by Mexican officials, which Juan Carlos Baker described during an event hosted by the Wilson Center on April 3. He said that "relatively speaking, based on what other countries, competitors of Mexico, Vietnam, China, Taiwan and others are going to be facing, Mexico seems to be relatively well off compared to those, because, again, there will be this natural gap that somehow continues to provide Mexico with a competitive edge."
However, a relatively light tariff is still a tariff, he said: "Let's not forget that, not even three months ago, Mexico was paying zero tariffs to enter the United States."
Mexico is particularly vulnerable to trade fluctuations, said José Antonio González Anaya of the Atlantic Council, because it "trades almost 90% of its GDP, and most of that trade, almost between 80 and 90 [percent], is with the United States. So any small movement of trade with the United States has a huge impact on Mexico."
Shunko Rojas, a former undersecretary for International trade in Argentina, breezily dismissed tariffs as giving "a competitive advantage compared to other major U.S. trading partners like the European Union, China, India, Japan and other Asian countries who are now facing about 20% or 30% tariffs." Liberation Day could therefore be a net benefit to Argentina, he argued, because the exports, "in which Argentina is quite competitive" give an "advantage vis-a-vis its competitors in the U.S. market. So, all in all, the impact on Argentine trade balance should be limited."