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Threats of import tariffs and looming protectionism under the incoming Trump administration are contributing to a fuzzy outlook for Latin American trade this year, a senior economist from the Inter-American Development Bank (IDB). “The reality is what we do not know. We do not know what is going to happen. We do not know which speed of tariffs, if any, will be imposed by the new administration,” Paolo Giordano, principal economist at the IDB, told LatinFinance . Mexico, which upgraded its free trade agreement with the US in 2020, has been singled out by Trump along with Canada as a potential target for tariffs; so has Brazil albeit to a lesser extent. But despite Trump’s harsh rhetoric, it is too soon to jump to conclusions about his trade policy, said Giordano. “If you look back to 2016, during the first [Trump] administration, there were the same concerns, and then it turned out the outcome was quite positive both for Mexico and the US,” he said. “At this stage, it would be wise to hold judgment and really see what the actual policy changes will be.” EXPORT GROWTH Export growth in Latin America and the Caribbean is expected to moderate this year after a 4.1% increase last year, the IDB said in a trade report this week. Argentina, Uruguay, Mexico, and Guyana registered the strongest gains in 2024, while exports from Central America stagnated last year. “We cannot see a sign of sustained recovery yet. We expect moderate growth at best,” he said. Giordano said that beyond policy issues, there are also uncertainties in terms of climate change and commodity prices. “The uncertainty is really what the impact will be on prices in general. Commodity prices really tend to impact the export performance of Latin America. The trajectory of the dollar will be important for commodity prices,” he said.
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