By Manuel Egaña
Ever since the Trump administration came into office, there’s been an ever increasing risk of a global trade war. At first, the administration’s shots were fired at NAFTA, then the message became more and more about ending every single negative balance of trade and threats of steel tariffs have been made even to the European Union, Mexico and Canada. Now it seems that that a trade war with China is imminent.
Latin America has been going through very important political changes lately. For the past decades it had been riddled with socialist/anti-capitalist/protectionist regimes that (not surprisingly) left the region’s economy in dire straits.
However, more recently Latin America has been shifting towards free trade and market driven economies. Even the notoriously protectionist MERCOSUR has been working on a Free Trade agreement with the European Union. Everything seems to be moving in the right direction except for one thing, the United States.
It’s really hard to believe that after so many years of socialist rule in Latin America, the still very delicate swing towards capitalism has been met with resistance by the United States. Given the current geopolitical climate worldwide, it would be very unwise for the United Sates to continue down this road if it wants to keep any influence in the region.
One of Latin America’s biggest problem is that it doesn’t trade much with itself. Virtually every country in the region has two main trading partners, the United States and China. They are usually disputing the first and second spot in every South American country and far from whichever comes in third.
Now, given the fact that this new capitalist wave in Latin America is still in its early stages, its governments have yet to completely roll back years of far left policies and show the people the benefits of a market driven economy. So, if these new Latin governments can’t get Free Trade Agreements with the United States, they will inevitably be forced to turn to China.
It seems ironic that Latin America could be forced to reach Free Trade agreements with China’s Communist Party in order to save Capitalism in the region. In the middle of all the new geopolitical challenges the United States faces with Russia becoming more aggressive each day and China trying to become the world’s economic superpower, it’s in the United Sates best interest to keep its own continent from turning to China and/or Russia (Venezuela, Cuba).