Latin-America the unexpected Big Winner in the Tit-for-Tat between China and the USA

By Jorge Reano

Export Portal

At the last Atlantic Council, William Cohen, the former US Secretary of Defense stated, regarding the policies which China may be ready to act upon if the Trade War with the US gets wind: “They’ll look where they can hurt the United States and do minimum damage to [China]…If they hit the agricultural sector, for example, they’ll look to Brazil or Chile or other Latin American countries to come in and fill their needs.”

It must be understood that the trade relationship between China and Latin-America has expanded geometrically within the last decade, which translates into Latin American countries having increased their exports into the Chinese market by close to $100 Billion in products, annually.  In Latin America, China is the top trade partner for Brazil, Chile, and Peru.

Peru, the darling of Wall Street in Latin America, survived and revived its economy while the rest of the world scrambled during the Economic meltdown of 2008, because Peru was the first country in Latin America to devise and work with alternative markets other than the US, in order to maintain a strong flow of investments and increase its GDP: Mainly the Asia Pacific Trade Members.

Thus, the aforementioned example proves Cohen’s argument that the Globalization of Trade which China has undertaken, by enacting multilateral trade relations, especially with the most important Latin American countries, could undermine the United States in the Trump era of “America First” thought.

Brazil, Peru, Chile, Mexico and Argentina are among the top Latin American economies which have already developed extensive trade agreements with China and the United States, primarily trading copper, iron ore, soybeans, and crude oil into China and manufacturing products into the U.S.

If policies such as tariffs are enacted, compiled with the US exit from the TPP, the Trump Administration runs the risk of opening the door to extremely beneficial trade opportunities for Latin-American countries with China.  Opportunities which some, such as Brazil, Peru, Chile and Mexico have already taken, and which the rest may follow en-masse.

 “When we ignore our neighbors to the south, we create a vacuum,” William Cohen said. “We ignore Latin America to our peril.”