How the Election of Trump in the US will impact the logistics industry in Latin America

Diego Rodríguez Paez
Director of Logistics and Industry Practice
AMI

With Trump’s return to the White House, several Latin American countries could see a shift in their economic fortunes based on their relationship with the U.S, which could significantly alter the logistics landscape. Some leaders, like Argentina’s Javier Milei, are actively seeking closer ties with Trump’s administration, hoping for favorable trade deals and investment boosts.

However, other countries, such as Brazil, could face challenges if their economic ties with the U.S. weaken. Here’s a closer look at the opportunities and risks facing critical Latin American and Caribbean nations.

1. Argentina: A New Ally for Javier Milei

Argentina’s President-elect, Javier Milei, has openly admired Trump, signaling a shift toward stronger bilateral relations.  Just one week after Trump’s election, his upcoming meeting with Trump underscores Argentina’s eagerness to forge a closer relationship. Milei’s recent discussions with Tesla CEO Elon Musk highlight his commitment to attracting U.S. tech and energy investment, particularly in Argentina’s lithium and mining sectors.

• Expanded Market Access: With potential currency restrictions lifted, Argentine farmers and agribusinesses will have more financial freedom to invest in technology, improve yields, and export to the U.S. more competitively. As a result, Argentine beef exports could see increased demand from the U.S., especially as the Trump administration’s trade tensions with other agricultural exporters like Brazil are likely to deteriorate.

• Growth in High-Value Exports: Reduced currency restrictions would enable manufacturing companies to source imported components and machinery more easily, enabling them to produce higher-value goods. Sectors such as automotive parts, machinery, and electronics could benefit from enhanced trade relations and new investments.

• Investment Appeal: Argentina’s abundant natural resources—especially lithium, a critical element for electric vehicle batteries—make it an attractive destination for U.S. investors. Milei’s administration will likely prioritize reducing trade barriers and incentivizing foreign investments.

• IMF Debt Relief: A stronger U.S.-Argentina relationship may provide more leverage in securing debt relief or restructuring with the IMF, essential for Argentina’s economic recovery and lifting currency restrictions.

2. Mexico: Uncertainty for Cross-Border Trade

As Trump’s administration reexamines trade deals, particularly with Mexico, this uncertainty may slow or halt key infrastructure projects in the next 12 months. Companies are more cautious about significant investments, not knowing how a renegotiated USMCA deal might impact their bottom lines.

• Stalled Infrastructure Projects: We may see a pause or outright cancellation in constructing industrial parks serving cross-border projects.

• Short-Term Boost to Freight Volume: We will see larger exports from Mexico next year as U.S. companies rush to import goods before the likely renegotiation of the USMCA in 2026, create further restrictions. Many businesses will want to stock up before any tariffs kick in, which could push up freight rates. This demand increase could bring quick profits to logistics companies that handle imports.

• Long-Term Uncertainty: Cross-border trade might drop in 2026 if tariffs or strict trade policies emerge from a new USMCA. This would impact logistics companies involved in U.S.-Mexico trade, especially in sectors like automotive and electronics that rely heavily on this route.

3. Brazil: A Potential Loser Amid Shifting Trade Dynamics

Brazil’s relationship with the U.S. has historically oscillated. Still, under Trump’s previous administration, the country significantly expanded its economic ties with China, especially after China replaced the U.S. with Brazilian soybean and corn imports. This trend could intensify if U.S.-China relations become strained again, with Brazil likely to strengthen its export flows to China. However, Brazil currently enjoys a booming export relationship with the U.S., particularly in sectors like beef and industrial goods.

• Vulnerable Export Sectors: In 2024, U.S. imports of Brazilian beef reached record highs, as a shortage in domestic cattle herds created a demand for foreign beef. With the U.S. as the top destination for Brazil’s industrial exports, any disruptions in U.S.-Brazil trade would affect not only Brazil’s agricultural sector but also its industrial goods market.

• Growing Dependence on China: Brazil’s deepening ties with China could lead to more robust agricultural exports to Asia, especially in sectors such as soybeans, corn, and meat products. Should U.S.-China tensions escalate under Trump, Brazil may find itself even more aligned with China, as it did during Trump’s previous term.

• Higher interest rates: With inflation running high in Brazil, and the Real weakening, the Central Bank will become more hawkish in 2025, pushing interest rates above 13.5% by the end of the year. This will impact consumer spending, and in turn transportation and storage sectors as the domestic economy loses steam.

4. Colombia: A mixed feeling

With U.S.-China trade tensions likely to increase under Trump, there may be new opportunities for Colombian manufacturers as U.S. companies seek alternative locations to Mexico and China. However, Trump’s election could lead to heightened tensions with Colombia due to differing priorities and ideological stances between the presidents, driving U.S. companies to opt for more politically aligned Latin American partners. We don’t foresee reductions in Colombia’s exports to North America, as the country has a negative trade balance with the US.

• Cross-Border E-commerce Bonanza: Fashion brands could see an opportunity to win over U.S. consumers, especially as people look for affordable and distinctive products. For example, the region’s vibrant, unique designs in sportswear and bathing suits could have a chance to step in and fill the gap as Chinese clothing is heavily taxed and the de minimus loophole is closed by the US.

• Supporting Export Services: To help smaller fashion companies expand to the U.S., there could be a rise in services specifically for cross-border e-commerce exports, like assistance with compliance, logistics, and warehousing. For example, bonded warehousing services for fashion items might help with seasonal demands and product storage.

• Regional diversification: Should tariffs or other restrictions affect Mexico, U.S. businesses might consider other Latin American countries as production sites like Colombia, considering its competitive labor costs but Petro’s rhetoric may stand in the way. Also, it’s not easy to quickly scale up production. Meeting the demands of global companies could require significant investment in training, technology, and efficiency, and it may take time to develop fully.

5. Dominican Republic, Caribbean, and Central America: Short-Term Gains, Long-Term Risks

For smaller nations in the Caribbean and Central America, Trump’s immigration policies will likely have both immediate and lasting impacts. Historically, remittances from the U.S. are critical in these economies, sustaining consumer spending and helping drive growth. However, Trump’s hardline stance on immigration could create a complex scenario for these nations.

• Short-Term Boost to Remittances: Fears of deportation among immigrants could prompt a surge in remittance flows over the next six months, as workers in the U.S. send more money home to plan their future. This uptick in remittances would boost consumer spending, positively impacting retail, housing, and imports.

• Long-Term Economic Strain: In the longer term, however, mass deportations could significantly reduce the remittance flow, leading to lower income levels. This would curb economic growth and contribute to social instability. Additionally, with fewer people able to send money back home, consumer spending will drop, weakening the domestic economies.

• Rising Social Tensions, Impacting Nearshoring: Social instability may increase as deported immigrants return to countries with limited job opportunities. This could strain government resources and discourage foreign manufacturers to consider this region as potential nearshoring location.

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Diego Rodríguez Paez Senior Director of the Logistics Practice

Diego Rodríguez is the Director of the logistics and industrial practice at Americas Market Intelligence, handling dozens of market analysis and competitive intelligence studies throughout Latin America. He has also served as a consultant to more than 20 multinational companies.

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