A few weeks ago, Secretary of State Rex Tillerson visited Latin America (Mexico, Argentina, Peru, Colombia, and Jamaica). In a short speech at the University of Texas at Austin—en route to his first stop in Mexico—Tillerson said, “today China is getting a foothold in Latin America…using economic statecraft to pull the region into its orbit; the question is at what price.” Secretary Tillerson’s statement, though, begs the question: How do U.S.–Latin America trade relations today compare to Sino–Latin America trade relations? Specifically, how protectionist are U.S. policies toward Latin America compared to China’s?
China’s increased trade activity and elevated economic role in Latin America are explained not only by China’s own trade strategy for the region, but also by how the U.S. has become more protectionist toward Latin America in the last decade. In other words, Tillerson’s concern about China’s rise in the region is not only a product of what China has actively done—it is also a result of what the U.S. has not done in these past years.
First, it is important to understand the nature of trade relations between China and Latin America in comparison to the U.S.-Latin American relationship. Considering trade flows in South America, the U.S. has become a less relevant market to South America, both as supplier and as a consumer (see Graph 1).
Graph 1: U.S.–South America 2015–2017 Trade Figures
China has facilitated greater trade access to Latin America than the U.S. during the last decade. While Chinese trade policies have been positive toward Latin America, the U.S. has been increasingly protectionist toward the region (Graph 2).
Graph 2: China’s trade policies toward Latin America
Since 2009, the U.S. has implemented policies that have restricted trade with Latin America, which is key to understanding why their trade relations have deteriorated. For instance, in 2017, the U.S. reclassified metal step stools, effectively raising tariffs on iron and steel products coming from Brazil; in January 2018, the U.S. started to requires additional record-keeping and reporting for imported seafood, which affected imports from Argentina; in 2017, it also reclassified coconut water, raising the applicable tariff on this product’s import from Argentina. And those are just a few examples from a much longer list of U.S. protectionist policies toward Latin American.
While the U.S. has implemented an average of 422 protectionist policies toward Latin America each year, China has only implemented, on average, 44 policies per year that negatively affect the region (Graph 3).
Graph 3: U.S. protectionist policies toward Latin America
These shifting patterns have prompted corresponding changes in Latin American sentiment toward China and the United States. Throughout the region, people have developed a more favorable view of China in response to its increasingly inclusive economic measures. Their view of the U.S., on the other hand, has become less favorable as it adopts an increasingly protectionist stance.
As China gains strength in Latin America with respect to both reputation and actual economic activity, U.S. officials have voiced doubt about its actions and intentions. “What price,” as Tillerson put it, does Latin America pay for Chinese growth?
Perhaps this is of legitimate concern to U.S. officials—but if such concern stems from a desire to protect U.S. interests and its position in Latin America, then clearly there are proactive measures the U.S. can take independently to improve that position. Instead of focusing on the risks of China’s trade ties with the region, the U.S. should revise its own approach. U.S. protectionist policies are clearly losing to China’s more open, development-oriented measures; that key difference in policy focus should be recognized and considered as the U.S. considers and shapes its regional trade strategy.
Nicolas Albertoni is a Fulbright-Laspau Scholar at University of Southern California pursuing a Ph.D. in political science and international relations. He received a Masters from Georgetown University’s School of Foreign Service. He is the Trade Policy Project Lead for the Security and Political Economy Lab at USC.
Madeline Zheng is an undergraduate student at the University of Southern California, studying Philosophy and Applied & Computational Mathematics. She is the Trade Policy Team Lead for the Security and Political Economy Lab at USC.