Mexico and Colombia, by far, will be the countries most exposed to the difficulty of opening up further to the EU.
The United States' trade policy under the Trump administration, with increased tariffs, among other factors, could have negative effects on the Latin American economy, such as the depreciation of local currencies against the dollar or higher inflation in the event of retaliation.
Furthermore, according to the Bank of Spain's Latin American Economic Report for the second quarter of 2024, these policies could also have an impact on Latin America's Gross Domestic Product (GDP), although this could be mitigated by possible trade diversion.
Mexico is by far the country most exposed to a potential destabilization of trade flows with the United States, both due to its degree of openness and the fact that 83% of its exports go to that country. Colombia follows closely behind, with just under 30%.
These figures are significantly lower for the rest of the region's major economies, with trade more oriented toward China (Brazil, Chile, and Peru) or more diversified.
The situation is similar for services exports, although their quantitative significance is lower, with values reaching 9% of GDP in Chile and Colombia, 7% in Mexico, 6% in Brazil, and 5% in Peru.
For Mexico, 70% of these exports go to the United States, while for Colombia and Peru they account for 30-40%, and for the rest, they represent around 10%.
On the other hand, for Brazil, Chile, and Argentina, the main destination for services exports is the European Union (around 20% of the total).
MATERIALIZATION OF 25% TARIFFS ON MEXICO
A more adverse scenario for Mexico would be the materialization of the announced imposition of tariffs of 25% on that country, 25% on Canada (10% on electricity and energy), and 10% on China.
In this case, and if the affected countries were to apply symmetrical retaliation, economic activity in Mexico would contract by up to 3.1% after three years, and inflation would increase by 2.6 percentage points in the first year (0.9 percentage points in the third year).
In the scenario of global tariffs being imposed, Mexico's exports to the United States would fall by 17% (21% in the worst-case scenario), while its total exports would fall by 14%. This demonstrates a reduced capacity to redirect exports to other markets and mitigate the impact of this hypothetical, more restrictive trade policy.
Advanced manufacturing of vehicles and computers would account for the majority of the decline in exports to the United States. This sectoral pattern demonstrates Mexico's strong dependence on the United States in specific high-value-added industries.
EUROPEAN UNION, ALTERNATIVE DESTINATION
One avenue for diversifying Mexican exports to other markets is the pact (signed in January 2025) between Mexico and the EU to modernize the current Global Agreement, signed in 2000, which could lead to increased trade between the two parties.
In Mexico's case, the EU could constitute an alternative destination for some goods, such as crude oil, certain types of vehicles, certain engine components, or certain medical instruments, as Mexico already has a significant presence in the European market.
Along these same lines, from the perspective of other parts of the region, the Mercosur countries and the EU reached an association agreement in December 2024, with the aim of strengthening commercial, political, and cooperation ties between the two areas.
As for Colombia, its largest export to the United States (oil) has a very low market share in the EU and China, while other goods such as coffee, gold, and some oil derivatives, with high shares in both the United States and the EU, could expand their presence in the European market.
