The presidential elections in USA will have a considerable impact on the trade war that the world’s leading economy maintains with China, with effects on the relationship that both nations have with Latin America, said the rating agency Moody’s.
In this way, he maintains that “the bipartisan objectives of the economic policy of USA on supply chain resilience and industrial capacity will influence US trade policy toward Latin America“. In that sense, he indicated that both candidates would opt for a more protectionist stance due to strong geopolitical frictions, as well as in relation to national security concerns and technological rivalries.
War with China
However, both parties agree on one objective: to counteract the growing dominance of China in strategic sectors and global supply chains, including Latin America, hence Uruguay would also suffer the consequences. Meanwhile, Trump and Harris have very different strategies regarding how to avoid Chinese advance in their businesses.
kamala harris donald trump debate united states elections.jpg
According to the rating agency, a government of Trump would choose to adopt a bilateral approach to global trade, rather than a collaborative approach. This would cause “a reduction in external demand for exports of Latin America and would put pressure on exchange rates, which would complicate monetary policy.”
Meanwhile, a Harris government would be, to a large extent, an extension of the current administration of Joe Biden Therefore, relations with allies and partners would be strengthened. “A Harris government would seek to develop a coordinated response to the policies of China that harm American industries, while maintaining specific restrictions on China and collaborating with multilateral institutions, such as the Inter-American Bank of Development or the Central American Bank for Economic Integration“Moody’s said.
The Chinese advance in Latin America
Added to this is the fact that Chinese influence in trade in Latin America comes in growth. According to Moody’s, foreign direct investment USA in this region was 1.6 trillion dollars in 2023, compared to the 10,000 million placed in China. However, trade between the Asian giant and Latin America grew a total of 469 billion dollars compared to 30 billion in the United States.
Although USA remains the main foreign investor in this part of the world, China It has managed to become South America’s main trading partner and an important source of loans, which makes it gain ground over the North American country. Therefore, whoever wins the United States elections, the objective will be to try to prevent the region’s commercial ties with Beijing from deepening..
However, Latin countries do not want to choose between one or the other but rather “would prefer to maintain trade relations with both, even more so if USA does not offer alternatives investment y financing that counteract China’s offers,” said the rating agency.
Uruguay’s relationship with the two powers
In the midst of North American intentions to prevent the Asian country from advancing in this region of the world, China continues to position itself as the main destination for Uruguayan exports. Both, Uruguay still waiting for the progress of the Free Trade Agreement (FTA) with that country more than two years ago, even generating disagreements within Mercosur due to its protectionist position.
For their part, businesses with USA They continue to advance marked by an increase in exports of services to that country, which managed to position itself as one of the most important on the list. In addition, Uruguay was proposed by that country as a “pilot country” to join the UMSCA (exNafta), the Free Trade Agreement regional that maintains with Canada and Mexico.
