Trade War Shake-Up: How US-China Tensions May Reshape Latin America’s Retail Supply Chains

Diego Rodríguez Paez
Director of Logistics and Industry Practice
AMI

The U.S.-China trade war isn’t just a distant clash between economic giants—it may accelerate changes in sourcing and inventory strategies for retailers across Latin America. As tariffs squeeze Chinese exporters out of the U.S. market, a flood of discounted goods may pour into Mexico, Brazil, Peru, and Chile, while Caribbean stores scramble to adjust to pricier U.S. imports. Meanwhile, a hidden logistics battle is brewing between Panama’s booming free trade zone and Peru’s Chancay, set to redefine how goods flow into the region.

Chinese Exporters Pushing into Latin America

China’s Overcapacity & Diversion Strategy: With the U.S. market becoming less attractive due to tariffs, Chinese manufacturers may flood Latin America with discounted goods (e.g., electronics, textiles, automotive parts) to maintain sales volumes.

Price Advantages for Latin American Retailers: Mexican, Brazilian, and Chilean retailers could benefit from cheaper Chinese imports, which could improve margins or lower consumer prices.

Increased Competition for Local Producers: A surge in Chinese goods could hurt Latin American manufacturers (e.g., Brazil’s textile industry, Mexico’s appliance sector), forcing them to lobby for anti-dumping tariffs or subsidies.

Regional Differences Matter

• Brazil & Argentina: More likely to resist Chinese dumping with tariffs, pushing retailers to source locally.

• Chile & Peru: Open markets with free trade agreements (e.g., CPTPP) may see the biggest influx of Chinese goods.

Caribbean and Central American retailers may experience higher prices

Trinidad & Tobago, Guatemala, and the Dominican Republic often rely more on U.S. sourcing than Chinese imports due to cash flow constraints, shorter lead times, and existing trade relationships.

If U.S. goods become more expensive (due to tariffs on Chinese inputs), Caribbean/Central American retailers may:

• Some will seek substitute suppliers in Panama’s FTZ.
• Some retailers will only shift to China for ultra-low-cost, non-urgent goods (e.g., seasonal items bought months in advance).

Faster Lead Times & Lower Inventory Costs

• Shipping from China: Takes 30–45+ days by sea, tying up critical working capital
• U.S. Sourcing: Goods arrive in 5–15 days via Miami or other regional hubs (e.g., Panama, Kingston), allowing faster inventory turnover.
• Critical for perishables, fashion, and electronics, where delays mean lost sales.

Re-routing of goods through Panama & Chancay to serve Latin America

The U.S.-China trade war may accelerate changes in inventory hubs serving Latin America. Two critical players in this shift are:

Next Steps

The U.S.-China trade war may redraw the supply chain map across Latin America – are you positioned to win? With Chinese exporters flooding new markets, logistics routes shifting, and protectionist policies emerging, yesterday’s sourcing playbook no longer applies.

Americas Market Intelligence (AMI) delivers the actionable intelligence you need to:

• Anticipate regulatory risks before they impact your bottom line
• Decode the winners and losers in Latin America’s rapidly evolving trade landscape
• Optimize your supply chain between U.S., China, and regional alternatives
• Identify cost-saving opportunities in emerging hubs like Panama and Chancay

Contact us for more information.

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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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