When former US President Donald Trump disclosed the scale of new tariffs that would apply globally, much of South America appeared relieved.
The majority of the continent—ten out of twelve countries—were assigned a comparatively modest 10% tariff.
Guyana and Venezuela initially faced higher rates of 38% and 15%, later reduced to 10% as Trump suspended elevated tariffs for most nations for a 90-day period.
Exceptions remain for China, now subject to a 145% tariff, while Canada and Mexico still face 25% tariffs on certain US-bound exports.
Some analysts suggest this outcome constitutes a victory for South America, as higher tariffs against China, Canada, and Mexico could enhance the appeal of South American goods in the US and global markets.
However, this perspective risks understating the broader uncertainty confronting global trade, which also affects South American economies.
This article examines both sides of the debate, beginning with the potential benefits for the continent.
South America boasts significant commodity wealth. Its leading economies, Brazil and Argentina, are major exporters—in particular, of soybeans, petroleum, and, for Brazil, iron ore used in steelmaking.
The dramatic US tariffs on Chinese exports, coupled with China’s reciprocal 125% duties on US goods, may generate new openings for South American sellers.
Brazil, for example, could expand agricultural exports to China, replacing some US suppliers. China already ranks as Brazil’s largest export destination, ahead of the US.
This is not without precedent: during Trump’s first term, Chinese purchases of certain commodities, such as soybeans, shifted from the US to Brazil, boosting Brazilian producers.
Now, with another soybean harvest underway in Brazil, hopes for similar gains persist.
Among the optimists is Frederico D’Avila, a farmer and former legislator associated with ex-president Jair Bolsonaro. D’Avila previously served as a leading figure within Aprosoja, the national soybean producers’ association.
He told the BBC that Trump’s first term “was excellent for Brazilian agriculture,” adding that Trump’s tariffs “favoured us.”
Nevertheless, Professor Juan Carlos Hallak, an international economics specialist at the University of Buenos Aires, offers a nuanced counterpoint. He contends that raising bilateral trade barriers primarily alters trading partners, but not the total financial gains, as commodity prices are determined globally.
According to Hallak, South American countries should not anticipate higher revenues from these shifts—only a change in buyers.
He explains: “Prices are determined by wider macroeconomic conditions… such as recessions,” speaking to the BBC.
Meanwhile, other South American sectors are eyeing opportunities arising from Trump’s tariffs, anticipating increased global demand for their offerings as countries seek alternatives to US suppliers.
For instance, Brazilian beef producers are targeting new markets. President Luiz Inácio Lula da Silva recently visited Japan to advocate the opening of the Japanese market to Brazilian beef.
Currently, Japan sources 40% of its beef from the US, but following Trump’s threats of a 24% tariff, Tokyo may look increasingly to South America.
Brazilian industries such as coffee and footwear could also benefit, strengthening their competitive position against Asian rivals in the US market.
Brazil remains the world’s largest producer of coffee, with Vietnam, Indonesia, and Colombia next in line.
Trump initially imposed tariffs of 46% on Vietnam and 32% on Indonesia; while these are presently suspended, a potential return in July would make coffee beans from those countries more expensive in the US market.
This could allow Brazilian and Colombian coffee to further consolidate their lead as top suppliers to the US.
Similarly, Brazil’s footwear manufacturers could increase their US exports due to high tariffs on Chinese shoes. While China remains the world’s primary footwear producer, Brazil ranks fifth globally.
India, Vietnam, and Indonesia complete the top five, with India initially receiving a 26% US tariff rate.
Furthermore, Uruguay’s new President, Yamandú Orsi, has noted that Trump’s tariffs are helping to advance EU-Mercosur trade negotiations, asserting that “Europe now has little choice but to reconsider some demands” as it seeks diverse trade partners.
Nevertheless, such outcomes remain contingent. The uncertainty in timing and policy direction contributes to significant international trade instability.
It is difficult to weigh whether the potential advantages for South America outweigh the inherent risks.
Even at 10%, tariffs could suppress US demand for South American imports—especially items that compete directly with US producers, including oil, soybeans, copper, iron ore, gold, and lithium.
Additionally, Washington has imposed a blanket 25% tariff on aluminium and steel imports from all countries.
Brazil is a leading supplier of both metals and holds significant bauxite and iron ore reserves, whereas Argentina hosts Aluar, one of the region’s largest aluminium producers alongside a modest steel sector.
Argentine companies warn they risk losing US market access and simultaneously facing increased competition from redirected Chinese exports.
Carlos Vaccaro, executive director of Argentina’s Steel Chamber, told the Buenos Aires Herald: “We are concerned by the diversion of products unable to enter the US.”
Trump’s tariff policy has also prompted volatility in global commodity markets, causing fluctuations in oil and copper prices—copper recently fell to a 17-month low—posing challenges for export-dependent economies like Chile and Peru.
Eduardo Levy Yeyati, former chief economist at Argentina’s Central Bank, characterizes the overall effect on prices and demand as a “serious headwind” for the region.
Looking forward, Yeyati warns that if Brazilian and Argentine exports to the US increase significantly, they could face future retaliation in the form of higher tariffs.
The fundamental objective of Trump’s approach, he argues, is to stimulate domestic production rather than amplify imports from elsewhere.
Yeyati also underscores that increased South American trade with China could provoke US countermeasures: “If Brazil fills the gap in China’s demand after the US, Washington might penalize Brazil as well.”
He suggests that Trump could leverage tariffs to pressure Latin America into curbing Chinese involvement in the region, noting Beijing’s significant infrastructure investment in Central and South America.
Ultimately, categorizing Trump’s tariffs as a simple win or loss for South America obscures the underlying complexity—particularly if, as expected, in July the 10% duty remains for all but China, Canada, and Mexico.
As Hallak comments: “It’s very hard to predict where this leads.”
He foresees the US prioritizing protections for its manufacturing sector over agriculture, albeit with caveats.
Hallak adds: “I’m not convinced Latin America is prepared to fully capitalize. There will be sector-specific opportunities, but a wholesale transformation? That seems unlikely.”
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