In the event of a Trump victory, experts say that the trade war with China is likely to intensify, with Mexico becoming the most affected country in the region.

Latin America is counting down the days until Nov. 5, when Americans will choose between relative continuity under Vice President Kamala Harris or a return to the policies that unleashed volatility in the region's largest markets and economies under Donald Trump.

Trade and tariffs, as well as the effect of monetary policy on global interest rates, are probably the main factors that could affect Latin America. Washington's economic war with China could particularly shake Mexico and give a boost to Brazil, especially in a retaliatory scenario.

On a broader level, a Trump victory would likely send shockwaves through the region, potentially putting pressure on some currencies and central banks, even as countries that are more closely tied to commodities or trade with China could emerge largely unscathed.

While the Biden administration has not reversed Trump's tariffs on China, Harris' plan to keep them more or less as they are makes her a non-aggressive figure toward the world's second-largest economy. Under Trump, tariffs on Chinese goods would rise to around 60%.

China will also be keeping an eye on talks to revise the US-Mexico-Canada trade agreement (USMCA), scheduled for 2026, as some products, including those from factories transplanted from Chinese companies, could no longer be treated as Mexican.

Auto content requirements, known as "rules of origin," are likely to figure prominently in those talks. Trump said weeks ago he would impose a tariff of up to 200% on vehicles imported from Mexico.

"A trade war (with China) is likely to escalate in the event of a Trump presidency, and I think the most affected country in Latin America could be Mexico," said Carlos de Sousa, emerging markets strategist and fixed-income portfolio manager at Vontobel.

"If Trump wins, he will likely try to leverage that sunset clause (of the USMCA) as a stronger negotiating position, potentially to change the rules of origin."

He added that increased scrutiny over trade rules regarding Mexico could mean "that we will return, in terms of Mexican asset prices, to a higher level of volatility than we have seen in the last five or six years."

In a recent note to clients, Lazard said a universal 10% tariff like the one proposed by Trump could be used as leverage to prevent countries from circumventing tariffs by targeting U.S. trading partners.

Other examples of its use as leverage could include policy around migration, as remittances make a major contribution to several regional economies, especially in Central America.

South American countries may be better positioned to fend off a stricter U.S. trade regime. The investment bank puts copper and lithium-producing powerhouse Chile on a list of countries with high exposure to the U.S. market that could be largely spared because of the less replaceable nature of their exports.

These calculations would be much less relevant in the event of a Harris victory.

"If Harris wins, likely under a divided government, tariff risk would likely decline and we would expect weaker growth and investment conditions in the US, which could lead to sustained outperformance of emerging market assets," the investment bank said in its October emerging markets outlook.

While Mexico's industrial export economy would likely feel the pressure under a second Trump administration, other countries that are primarily commodity exporters could even benefit.

South America could also benefit from its reduced reliance on remittances from the United States, which in a Trump scenario could be taxed at 10% if US Senator JD Vance, his running mate, goes ahead with his tax proposal.

Some Central American countries, such as Honduras and El Salvador, receive more than 20% of their GDP in remittances, meaning the tax could translate into a loss of a couple of percentage points of gross domestic product per year.

In the case of Mexico, the largest recipient of remittances in the region in terms of dollar amounts, the inflow of money could be reduced by more than 6 billion dollars per year, according to the estimate for 2023.

In 2018, as trade tensions soared under the Trump administration, China replaced all of its imports of U.S. soybeans with Brazilian ones. China is already Brazil’s largest trading partner, and South America’s largest economy would benefit even more from increased trade with the Asian giant.

"There may be a tariff outcome that helps Latin America if, as a result of a tit-for-tat dynamic, it redirects purchases of primary products from the United States to other suppliers such as Brazil and Argentina," said Alejo Czerwonko, CIO for emerging markets in the Americas at UBS Global Wealth Management.

"The rhetoric that tariff uncertainty can only hurt Latin America may be too simplistic."

A Trump presidency is expected to see the US budget deficit rise more than it would under Harris, driving up inflation and interest rates.

Tighter global financial conditions could also weigh on Latin American assets.

"If Trump wins and deficits are a bit larger, then the disinflation process could be a bit slower, and that could translate into a slightly slower monetary policy easing" in the United States, said Vontobel's De Sousa.

Tighter monetary policy in the United States has historically translated into subdued financial asset prices in emerging markets, including Latin America.

Finally, Argentine President Javier Milei, who shared the stage with Trump earlier this year at a conservative meeting outside Washington, could see his aggressive style, in true Trump style, rewarded.

Milei could benefit from greater US support if Trump is elected, as the grain exporter seeks to extend or renew its loan programme with the International Monetary Fund, of which Washington is the largest shareholder.

Trump is expected to take a "less institutional and more personal" approach to individual countries, said Francisco Campos, chief Latin American economist at Deutsche Bank.

"Due to the ideological affinity and similar style of government between Milei and Trump, perhaps Argentina could find itself with a little