John Price
Managing Director
AMI
On Thursday, May 15th, AMI teamed up with JAS to host a fascinating webinar discussion of Latin America’s rapidly changing trade and logistics dynamic.
The global geopolitical chessboard is undergoing a dramatic transformation, with Latin America emerging as a crucial battlefield in the intensifying rivalry between the United States and China. Once peripheral in global trade strategies, Latin America is now center stage as both superpowers vie for influence over its trade routes, strategic industries, and consumer markets.
A Shifting Global Paradigm
In the wake of global disruption—from trade wars to pandemic-induced supply chain shifts—Latin America has gained unprecedented strategic importance. The region’s natural resources, growing middle class, and geographical position make it a prize both China and the U.S. are eager to secure.
American Market Intelligence (AMI), alongside logistics firm JAS, recently held a deep-dive discussion on this geopolitical shift. With insights from industry experts Vivian Bruniality (JAS), Diego Rodriguez (AMI), and John Price (AMI), the session shed light on the dynamics driving trade flows and logistics decisions in Latin America amid this great power rivalry.
John Price
Managing Director
Vivian Brunialti
Regional Trade Lane Director
Diego Rodriguez
Practice Director,
Logistics & Industry
The Four Waves of Chinese Engagement
To understand China’s role, it’s essential to track its evolving strategy in Latin America over the past 25 years:
- Resource Acquisition: Unlike Japan or South Korea, which secured long-term resource contracts, China directly acquired stakes in Latin America’s mining, energy, and agricultural sectors. These investments ensured stable raw material supply for its booming industries.
- Infrastructure Diplomacy: Following the 2008 financial crisis, China ramped up public infrastructure spending to preserve employment at home. The Belt and Road Initiative (BRI) later extended this focus abroad, with Latin America becoming a new destination for Chinese engineering and infrastructure firms.
- Market Expansion: As China moved from being the world’s factory to a global brand player, it targeted middle-income countries for export expansion. Latin America, with its large consumer base, became a natural target—especially for electric vehicles, electronics, and e-commerce.
- Digital Penetration: Chinese private companies are now dominant players in the digital economy. In Brazil, for example, half of the ten largest e-commerce platforms are Chinese-owned.
U.S. Countermoves: Policy and Pushback
Historically, the U.S. has been Latin America’s primary partner. But this is changing. China has replaced the U.S. as the main trade partner for countries like Brazil, Chile, and Peru. This shift has triggered alarm in Washington, with bipartisan consensus now viewing China as a strategic threat.
Three pillars define U.S. foreign policy toward China: political, military, and corporate. While think tanks and the Department of Defense have long warned about Chinese expansion, it was only recently that the U.S. corporate sector—frustrated by limited success in China—aligned with this view. The result: increasingly aggressive U.S. trade policies aimed at curbing Chinese influence.
But Washington faces limits. While it may influence Mexico and Panama, it has little leverage over Brazil, Argentina, or Chile. These nations are too economically entwined with China to disengage easily.
Trade: The Numbers Don’t Lie
Trade between China and Latin America is not only growing—it’s outpacing Latin America’s trade with the U.S. Unlike the U.S., which competes with Latin American producers in sectors like agriculture and aerospace, China’s trade with the region is largely complementary.
This complementarity is translating into investments in ports, railways, and bonded warehouses, enabling China to solidify its logistics footprint. For instance, the new Chinese-built port of Chancay in Peru is poised to become a major trans-Pacific hub, connecting Chinese goods to South American markets more efficiently than traditional U.S.-based logistics hubs.
Logistics Realities: Air and Ocean Freight
Air Freight Trends
Vivian Bruniality from JAS highlighted that air freight volumes to Latin America are increasing, driven in part by e-commerce and semiconductor demand. New airports in Brazil are being adapted to accommodate the rise of cross-border online shopping, particularly from Chinese platforms like Shein and Temu.
Despite a 15% rise in air freight rates over the past year, Latin America remains attractive for Chinese exporters looking to circumvent U.S. tariffs. Miami continues to function as a key logistics hub, but alternatives are emerging across the region.
Ocean Freight Dynamics
Ocean shipping is also seeing a shakeup. With U.S. tariffs discouraging direct China-to-U.S. shipments, Chinese goods are increasingly being routed through Latin America. Capacity is shifting, especially from routes previously serving the U.S., toward emerging South American markets.
Brazil has seen the fastest growth in ocean-bound freight, even surpassing Mexico. The rise in EV exports from China to Brazil is one factor; another is the shift in trade lanes, with new direct routes established between China and countries like Chile and Peru.
Still, volatility remains. Blank sailings, equipment shortages, and rate fluctuations continue to challenge shippers. With U.S. peak seasons (like Black Friday) colliding with tariff pauses, the freight market is entering a turbulent period.
Semiconductor Boom vs. E-Commerce Explosion
While semiconductors are fast becoming a hot commodity—fueled by AI, IoT, and automotive demand—they won’t replace the sheer volume of e-commerce shipments. What they will do, however, is reshape supply chains.
Countries like Brazil are building semiconductor facilities, while Asian manufacturers are expanding into markets like Vietnam and Malaysia. This diversification away from China presents both opportunities and risks for Latin American logistics.
The 90-Day Window: Tariff Pause Turbulence
A temporary 90-day pause in U.S. tariffs on Chinese goods has further roiled the logistics landscape. Freight companies are rushing to ship as much as possible during this window, putting pressure on ports, warehouses, and ocean carriers.
This has led to immediate increases in air and ocean freight rates—especially from Asia. Carriers are reallocating vessels and capacity, often at the expense of Latin American trade lanes.
Panama, the Dominican Republic, and Colombia are responding by expanding their free trade zones and port capacities. In particular, Panama is emerging as a storage and transshipment hub, particularly attractive due to the high cost of U.S. bonded warehouses.
The U.S. Strategy: Chaos as Policy?
Diego Rodriguez made a compelling point: U.S. trade policy under Trump—and to an extent under Biden—has often prioritized short-term chaos over long-term strategy. Tariff threats are announced, retracted, and replaced with opaque negotiations.
Despite lofty goals—reshoring manufacturing, gaining market access, or isolating China—results have been limited. The U.S.-UK trade deal, for instance, yielded few tangible benefits. Meanwhile, markets like Brazil continue to deepen ties with China, with US$5.7 billion in new Chinese investments announced during a recent Lula-Xi meeting.
New Hubs on the Horizon
Miami and Panama remain key logistics nodes, but new hubs are emerging:
- Port of Chancay (Peru): Positioned to become a new trans-Pacific anchor for Chinese trade into Latin America.
- Dominican Republic & Panama: Expanding FTZs to capitalize on transshipment and deferred tariffs.
- Turbo (Colombia): A new port offering inland access and better flow of agricultural exports.
- Mexico: While affected by U.S. tariff policies, it remains central to nearshoring trends.
E-Commerce: The New Trade Titan
AMI’s research shows Chinese e-commerce platforms could increase Latin American sales by 47% in a single year as total LatAm B2C online sales eclipse US$100bn.
This boom is already driving demand for air cargo, bonded zones, and regional distribution centers. China is replicating its Southeast Asia model in Latin America—storing products closer to end markets and shipping via regional hubs to avoid customs issues and reduce delivery times.
The Future: Turbulent, but Full of Opportunity
Both China and the U.S. are playing for keeps, and Latin America sits at the heart of this new global game. The decisions made today about supply chain routes, investment destinations, and trade partnerships will reverberate for decades to come.
As Diego Rodriguez aptly put it: “During times of crisis, aggressive and bold actions create fortunes.”
Despite uncertainty, the message is clear: paralysis is not an option. Companies operating in Latin America must become more agile, reduce planning horizons, and lean on market intelligence to navigate the shifting landscape.
