With the implementation of the new tariff regime in the United States, the region’s economies are facing the most turmoil in at least a generation.
When US President Donald Trump launched a new system of tariffs on global imports arriving into the United States, investors reacted by withdrawing expectations and reconsidering investment dynamics while companies globally began preparing doomsday scenarios.
The effects in Latin America were no different. Brazil, the worst-hit economy, now faces tariffs of up to 50% on its exports and services to the United States: the second-highest tariffs Trump has applied to any country, equal to those imposed on India and trailing only those targeting China.
Most Latin American companies and economies were not affected to the same extent as Brazil, but Venezuela’s oil-exporting economy is now also affected by secondary tariffs imposed on third countries that deal with it. The entire region must also take into account the possibility of reduced global trade flows and a reshaping of trade and investment dynamics.
Most Latin economies export primarily agricultural products, commodities, textiles, and, in the case of Mexico, Brazil, and Argentina, manufactured goods. The region’s economies find themselves navigating through the greatest turmoil 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 country in Latin America that has been severely sanctioned by the United States, 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 secondary tariffs of 25% on the purchase of oil and commodities from the major exporter.
“Venezuela remains a rich country with significant natural resources, huge investment potential and a low entry ticket at the moment for those who have the patience to ride the current waves and a strategic approach to their investment portfolios,” says Horacio Vilotini, director of Venezuela’s Conabre Investment Promotion Agency and former CEO of the Caracas Stock Exchange.
“We have had a tightly controlled economy since 1920, highly dependent on gasoline exports, which created room for macroeconomic imbalances that were never corrected,” he points out. US sanctions began in 2015, but “although Venezuelan exports to the United States were curbed, they had the opposite effect than intended. New markets opened up and the poorest people in the country ended up being hardest hit by the loss of revenue, social programs and infrastructure programmes. Venezuelan businessmen began to invest more heavily in their country, and we see this in the actions of the Caracas Stock Exchange.”
According to Velutini, the market capitalization of the privately owned exchange is currently about $7 billion, with an annual trading volume of between $300 million and $400 million, mostly from Venezuelan investors.
Despite the sanctions, some international companies, including American companies, continue to operate in Venezuela. These companies include Chevron, under special authorization from the US government to participate in a joint venture with Venezuela’s state oil company, Venezuela’s state oil company, and Italy’s Repsol.
Vilotini says that the sanctions and political confrontation between Caracas and Washington have undoubtedly caused damage to the Venezuelan economy.
However, Venezuela’s GDP has grown for 17 consecutive quarters, and the latest Central Bank of Venezuela (BCV) forecasts point to 9.3% growth in 2025 and 5% growth in 2026. Sources outside Venezuela are less enthusiastic: UN estimates point to 5.8% growth this year, while the World Bank expects 2.3% growth in 2025, and 2.5% growth. In the period 2026-2027. The International Monetary Fund has a bleaker forecast for 2026, when it expects the country’s economy to contract by 5.5%.
Brazil
Latin America’s largest economy and the world’s tenth largest is now locked in a political and trade confrontation with the United States. The Trump administration was not prepared to negotiate a 50% tariff cut on Brazilian goods unless the government of President Luiz Inacio Lula da Silva dropped charges against former President Jair Bolsonaro, who has now been found guilty by Brazil’s Supreme Federal Court to 27 years in prison for planning a coup to stay in power.
Brazilian companies are struggling to adapt to the new tariffs; China has surpassed the United States as the largest importer of Brazilian goods, while the United States has fallen to the second largest importer.
“Exports of meat, coffee (Brazil is the world’s largest exporter of beans), semi-finished steel products, marble and granite are mostly affected,” says Daniel Telles, partner at Valor Investimentos, working in partnership with Brazilian investment firm XP. “Orange juice is one example with harmful effects on both countries. The United States does not produce enough to supply the domestic market, and tariffs on its largest exporter will inflate prices for American consumers.”
The main challenges are the lack of clarity on the way forward coupled with potential reciprocal tariffs and increased logistics costs. “The US strategy is clear,” Telles says. “They want to re-industrialize the country, increase growth through domestic employment and taxes, and limit the activity of countries that still trade with Russia and other competitors.”
As Brazil strives to respond, its trading patterns are changing dramatically.
“Despite the first negative impacts, we are already seeing some positive market responses, such as efforts to redesign logistics flows and a frantic search for new markets, along with expanding trade to existing secondary markets,” says Telles. “China has already overtaken the United States as Brazil’s largest trading partner. This should now increase over time due to US barriers. Kazakhstan and the GCC countries, including Saudi Arabia, the EU and Egypt, also have untapped potential.”
Other Latin countries face similar uncertainties, but not as severe. Mexico has a similar vegetation structure to Brazil but is less affected by the new tariff levels. Argentina has a dollarized economy, which helps it absorb the new rates. Uruguay and Paraguay attract foreign direct investment in the form of wealthy companies and individuals trying to escape heavy taxes elsewhere, and thus are not as affected by US tariffs as their neighbors.
“In the short term, many of the current uncertainties, including diplomatic tensions and the risk of further sanctions and tariffs, should remain,” Tillis predicts. However, the Brazilian stock market reached an all-time high on September 8th, the economy is growing continuously, and Brazil’s official interest rates remain at 15%, low enough to attract investment.
“What we see is that companies affected by the tariffs absorb the first impact and reduce their profits, but they also try to sell additional production within the Brazilian market, which leads to lower prices for coffee, meat products and many vegetables,” says Paulo Oliveira, CFO of Formosa Supermercados, which operates grocery and convenience stores.
Oliveira says there will be “significant losses” in processed containers that have not yet been shipped to the United States, adding that an average of 2,000 containers per week “will now need to find new buyers. Mango and grape producers from the northeastern part of Brazil, for whom the United States was their main market, have suffered significant losses and have to rethink sales of the current crop and how they will manage the next cycle.”
Peru
Compared to most Latin American economies, Peru remains stable, with the key interest rate remaining steady at 4.5%, and inflation is not expected to exceed 1.7% this year. Most domestic production is concentrated in services, agricultural products, and mining goods, especially refined copper, gold, and silver, as well as textiles.
The new U.S. tariff rates mostly affect exports of berries, grapes, avocados and textiles, according to Luis Brettel, senior audit partner for financial products and commodities at Deloitte Touche & Tomatsu in Peru.
“The solution was to diversify markets with a focus on China, which has already become a major player in Peru, as well as looking for new markets in Latin America,” he says. “Thanks to the huge port of Chancai, which China runs and opened last year, exports to Asia have become easier for the country.”
He points out that Peruvian companies are working to redesign and improve their logistics operations, introducing digitalization, robotics and artificial intelligence, and formulating new cooperative and international agreements.
He adds: “Fortunately, refined copper was on the list of exemptions from US customs duties, and the industry is not affected by the current measures, while gold and silver are stable in international markets.”
However, the government lowered its GDP growth forecast for this year from 4.1% to 3.5%, anticipating lower economic output and investments.
However, Brettel remains cautiously optimistic: “Ultimately, this will lead to better logistical flows, new market openings, Peruvian adaptation through new strategies and a fully independent central bank, which will mitigate political uncertainty and maintain domestic economic stability.”
