REACTION: Trump’s Tariffs and Latin America
- Antonio Ortiz-Mena
- 3 abr 2025
- 3 Min. de lectura
Actualizado: 22 jul 2025
Reaction
April 3, 2025
By Antonio Ortiz-Mena
Source: Americas Quarterly
The baseline 10% tariff applies to many countries in the Americas, with notable exceptions.
TRUMP & LATIN AMERICA
On April 2, President Donald Trump imposed a round of reciprocal tariffs on as many as 185 countries, a decision that is set to reshape global trade for months, if not years, to come. Branded as “Liberation Day” and part of Trump’s “America First” foreign policy, the tariffs were enacted via executive order and range from 10% to 50%.
Worth noting are the new tariffs levied on China (34%), Taiwan (32%), Japan (24%) and the EU (20%). The baseline 10% tariff was applied to many Latin American and Caribbean countries, with higher levies for Guyana (38%), Nicaragua (18%), and Venezuela (15%).
Mexico and Canada were excluded from yesterday’s announcements, but are still subject to tariffs on most imports to the U.S., with the new 25% tariff on U.S. auto imports set to affect North American supply chains.
AQ asked analysts to share their reactions and perspectives.
The U.S. has implemented tariffs on a wide range of imports from its trade partners, with some exceptions for goods that comply with the USMCA agreement. These tariffs aim to strengthen the U.S.’s position in the global economy, protect American workers, and promote domestic production of certain goods. Additionally, the tariffs are intended to reduce the U.S. trade deficit and generate revenue that could help offset the expected loss in tax revenue due to anticipated domestic tax cuts. Given the complexity and scale of these measures, it will take months—or even years—before their full impact becomes clear. However, several potential outcomes can be anticipated.
One possibility is that the U.S.’s trade partners will respond by reducing some tariffs and non-tariff barriers that currently restrict U.S. exports. In turn, the U.S. may then reduce its own tariffs, leading to more open and reciprocal trade. While this scenario remains plausible, another potential outcome is that some countries might challenge the legitimacy of unilateral tariff increases, either at the World Trade Organization (WTO) or through regional trade agreements. In response, these countries might impose higher tariffs on U.S. exports, especially impacting the U.S. agricultural and services sectors. Such retaliatory measures could undermine the U.S.’s goal of reducing its trade deficit.
Another concern arises if the U.S. intends to rely on significant tariff revenues to support its domestic economic policies. It remains unclear how this would be achievable if the U.S. simultaneously seeks to encourage import substitution—producing goods domestically that it had previously imported.
For many countries in the Americas, particularly those with China as their primary trade partner, there could be a growing push to diversify trade relationships away from the U.S. While the USMCA remains largely unaffected for Mexico and Canada, uncertainty looms, particularly in the automobile sector, where supply chains could face disruptions.
The tariff increases implemented on April 2 represent the largest since the 1930 Smoot-Hawley Tariff Act, which is often cited as exacerbating the economic downturn following the 1929 stock market crash. Since the establishment of the General Agreement on Tariffs and Trade (GATT) in 1947, countries have generally sought to avoid imposing large unilateral tariff increases, as such actions tend to provoke retaliatory measures that can harm all parties involved. While it is hoped that the U.S.’s envisioned scenario will unfold, the risk of escalation—something GATT was designed to prevent—remains a very real concern.
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