The impact of the tariffs imposed by U.S. President Donald Trump “has been less than expected” in Latin America, said the president of the Development Bank of Latin America and the Caribbean (CAF), Sergio Díaz-Granados, in an interview.
Dozens of economies around the world are facing U.S. customs duties as the “reciprocal” tariffs long threatened by Trump over what he considers unfair trade practices take effect. Some economists have warned that these measures could slow international trade by raising the cost of exports to the United States, the world’s largest economy.
However, “looking at the year to date from January to today, the impact has been less than expected. Obviously it generated a lot of turbulence at first, but the outlook is becoming clearer,” Díaz-Granados said on Friday.
That lower-than-expected tariff impact was due to the fact that “trade networks” between the United States and Latin America “were already very well established,” which eased adaptation to the new tariffs, according to the CAF president.
“Latin America has certain comparative advantages in the U.S. market: its proximity and a set of very deep ties that range from the presence of Hispanics and Latinos within the United States to the involvement of American companies as investors” in the region, Díaz-Granados noted.
He added that the region managed to soften the impact of the tariffs through negotiations by several countries with the United States after Washington announced higher import duties.
“The outlook now looks clearer with these new trade arrangements, where there will surely be some tariffs but there will also be some compensation within supply chains, and that will allow a new readjustment,” he said.
According to Díaz-Granados, by 2026 Latin America and the Caribbean will grow by an average of “around 3.2%,” three-tenths less than global economic growth.
“Mexico is going to regain its pace of investment and exports, which is good news because, at the end of the day, Mexico connects to and pulls a large part of the trade networks of Central America and northern South America,” Díaz-Granados said.
However, he lamented that due to low investment flows, low productivity, and insecurity, Latin America has maintained “economic growth below the global average” over the last decade. “The region needs to grow above four percent to begin structurally closing poverty and inequality gaps,” he warned.
Díaz-Granados presented in Panama the Latin American “Davos,” a forum that will bring together authorities from across the region in Panama City, including Brazil’s president, Luiz Inácio Lula da Silva, on January 28 and 29.
