With a new US tariff regime in place, the region’s economies face their greatest disruption in at least a generation.
When US President Donald Trump initiated a new regime of tariffs on global imports reaching the US, investors reacted by retracting forecasts and rethinking investment dynamics while companies globally started preparing their doomsday scenarios.
The effects in Latin America were no different. Brazil, the worst affected economy, now faces tariffs up to 50% on its exports and services provided to the US: the second highest tariffs Trump has applied to any country, equal to those imposed on India and behind only those hitting China.
Most Latin American companies and economies are not affected as severely as Brazil, but Venezuela’s oil-exporting economy is now also affected by secondary tariffs on third countries doing business with it. The entire region also must reckon with the prospect of reduced global commerce flows and reshaped trade and investment dynamics.
Most Latin economies principally export agricultural products, commodities, textiles, and—in the cases of Mexico, Brazil, and Argentina—manufactured goods. The region’s economies find themselves navigating the greatest disruption in at least a generation. Ultimately, however, some sectors may benefit from trade diversion and new marketing openings.
Venezuela
Aside from Cuba, Venezuela is the only Latin American country heavily sanctioned by the US, which has frozen most of its direct trade in both directions. However, Venezuela still exports oil and gas to a variety of countries. These are now affected by 25% secondary tariffs for purchasing oil and commodities from the big exporter.
“Venezuela remains a rich country with substantial natural resources, enormous potential for investment and a low entrance ticket at the moment for those with patience to ride the current waves and a strategic approach to their portfolio,” says Horacio Velutini, director at Conapri, the agency for investment promotion in Venezuela, and former CEO of the Caracas Stock Exchange.
“We’ve had a highly controlled economy since 1920, heavily dependent on petrol exports, which created the space for never-corrected macroeconomic imbalances,” he notes. The US sanctions began in 2015, but “despite curbing Venezuelan exports to the US, they had the opposite effect of what was intended. New markets opened and the poorest people of the country ended up most affected with the loss of revenue and social and infrastructure programs. Venezuelan entrepreneurs started more heavily investing in their own country, and we see this in the movements of the Caracas Stock Exchange.”
According to Velutini, the privately held bourse currently has a market capitalization of some $7 billion, with an annual exchange volume of between $300 million and $400 million, mostly from Venezuelan investors.
Despite sanctions, some international corporations, including US ones, continue to operate in Venezuela. These include Chevron, under a special authorization from the US government to participate in a joint venture with PDVSA, the Venezuelan state oil company, and Italy’s Repsol.
The sanctions and the political standoff between Caracas and Washington have undoubtedly damaged the Venezuelan economy, Velutini allows.
That said, Venezuela’s GDP has grown for 17 straight quarters, the latest forecast by the Central Bank of Venezuela (BCV) indicates 9.3% growth in 2025 and 5% growth in 2026, he adds. Sources outside Venezuela are less enthusiastic: the UN estimates 5.8% growth this year, while the World Bank projects 2.3% in 2025, and 2.5% in 2026-2027. The IMF has a much grimmer outlook for 2026, projecting the country’s economy to shrink by 5.5%.
Brazil
Latin America’s largest economy and the world’s tenth largest is in a political as well as a trade-based face-off with the US. The Trump administration has been unwilling to negotiate down its 50% tariff on Brazilian goods unless the government of President Luiz Inácio Lula da Silva drops charges against former President Jair Bolsonaro, now convicted by the Brazilian Supreme Federal Court (STF) to 27 years in prison for plotting a coup to remain in power.
Brazilian businesses are struggling to adapt to the new tariffs; China has surpassed the US as the biggest importer of Brazilian goods, while the US sank to the second-largest importer.
“Most meat exports, coffee (Brazil is the world’s largest world exporter of the beans), semi-finished steel products, marble and granite, are affected,” says Daniel Teles, a partner at Valor Investimentos, who works in partnership with Brazilian investment house XP. “Orange juice is one example with detrimental effects on both countries. The US does not produce enough to supply the local market, and the tariffs on their largest exporter will inflate prices for US consumers.”
The principal challenges are lack of clarity going forward along with possible reciprocal tariffs and increased logistic costs.”The US strategy is clear,” says Teles. “They want to reindustrialize the country, increase growth through both local employment and taxation, and curb activity by countries still trading with Russia and other rivals.”
As Brazil scrambles to respond, its trading patterns are being significantly altered.
“Despite the first negative effects, we already see some positive market responses,” Teles says, “such as efforts to redesign logistic flows and a frantic search for new markets, along with expanded trade to current secondary markets. China had already overtaken the US as Brazil’s largest trading partner. This should now increase over time because of US barriers. Kazakhstan, the Gulf Cooperation Council countries, including Saudi Arabia, the EU, and Egypt have untapped potential, too.”
Other Latin countries face similar uncertainties, but not as severe. Mexico has a plant structure similar to Brazil’s but is less affected by the new tariff levels. Argentina has a dollarized economy, helping it absorb the new rates. Uruguay and Paraguay attract foreign direct investment both in the form of companies and wealthy individuals trying to escape heavier taxation elsewhere and, thus, are not as affected by US tariffs as its neighbors.
“In the short term,” Teles predicts, “much of the current uncertainties, including the diplomatic tensions and the risk of further sanctions and tariffs, should remain.” Nevertheless, the Brazilian stock exchange reached an alltime high on September 8, the economy is growing, and official interest rates in Brazil remains at 15%, low enough to attract investment.
Paulo Oliveira, CFO of Formosa Supermercados, which operates grocery and convenience stores, says, “What we see is companies affected by the tariffs absorbing the first impact and lowering their profits, but also trying to sell extra production within the Brazilian market, leading to price drops in coffee, meat products, and several vegetables.”
There will be “significant losses” in prepared containers not yet shipped to the US, Oliveira says, adding that an average of 2,000 containers per week “will now need to find new buyers. Producers of mango and grape from the northeastern part of Brazil, who had the US as their primary market, suffered significant losses and are having to rethink the sales of the current harvest and how they will manage the next cycle.”
Peru
Compared to most Latin American economies, Peru remains stable, with the key interest rate fixed at 4.5% and inflation not expected to surpass 1.7% this year. Most domestic output is centered in services, agricultural products, and mining commodities, especially refined copper, gold, and silver, as well as textiles.
The new US tariff rates mostly affect exports of blueberries, grapes, avocados, and textiles, according to Luis Pretel, senior auditing partner for financial products and commodities at Deloitte Touche & Tomatsu in Peru.
“The solution,” he says, “has been to diversify markets focusing on China, which is already a major player in Peru, as well as searching for new markets in Latin America. Thanks to the mega-port of Chancay, operated by China and inaugurated last year, exports to Asia have become simpler for the country.”
Peruvian companies are redesigning and improving their logistics processes, he notes, introducing digitalization, robotization, and AI, and crafting new cooperative and international agreements.
“Luckily, refined copper has been on the list of exemptions of US tariffs,” he adds, “and that industry is not affected by the current measures while gold and silver are stable in the international markets.”
That said, the government has lowered its GDP growth prediction for the year from 4.1% to 3.5%, anticipating diminished economic output and investments.
Pretel remains guardedly optimistic, however: “Ultimately, this will result in better logistic flows, new market openings, and Peru adapting through new strategies and a fully independent central bank, which will mitigate the political uncertainties and maintain local economic stability.”