Donald Trump’s return to the White House likely also signals the return of the unilateral trade policies that characterized his first term and precipitated trade wars between the United States and many of its trading partners, most notably China. As a candidate, the president-elect threatened a number of adverse trade actions including raising tariffs on all imports by 10%-20%. He has warned a number of specific countries as well—suggesting he would consider 60% tariffs on China and 25% tariffs on Canada and Mexico.
In this post, we examine the potential disruptions—and some possible opportunities—of a bellicose U.S. trade policy for Latin America and the Caribbean (LAC), whose countries number among the closest U.S. trading partners for agricultural products. High tariffs would represent a major policy reversal, as many U.S. agricultural imports currently have low (or zero) tariffs, particularly those coming from the countries that have FTAs with the United States (Figure 1). Among other impacts, increasing tariffs on LAC countries would significantly raise prices for those commodities for U.S. consumers.