Beyond trade wars – An assessment of LatAm’s Trump risks

We remain concerned about the potential fallout in Latin America from a second Trump presidency in areas other than a renewed trade war with Mexico.

What you will learn:

• Nearshoring offers a potential offset to concerns over trade wars as efforts to reduce US dependency on China and Taiwan will continue. However, we are sceptical this will bring a broader uplift to Latin America or a regional FDI boom. Mexico faces risks from the renegotiations of the USMCA free-trade agreement in 2026, with Donald Trump likely taking a harsher stance than Kamala Harris. The country’s judicial reform could cause a headache due to potentially contravening USMCA terms.
• Central America would be the most exposed to efforts to deter migrants from Latin America. The region is highly dependent on US remittances, which both Trump and Vance have threatened to target. The region could be exposed to threats to aid or the preferential trade access of the CAFTA-DR trade deal in order to influence migration policy and ties to China. Nicaragua may be singled out for its continued slide into authoritarianism.
• We see increased chances of sanctions on Venezuela ramping up in a second Trump term. However, with a downturn in Venezuela potentially triggering a new wave of immigration, our baseline remains for a continuation of current economic sanctions. Finally, we don’t think Trump would use US influence to win a new IMF deal for Argentina, despite his close relationship with President Javier Milei.

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