⚖️ Tangled Economies

Welcome to Latinometrics. We bring you Latin American insights and trends through concise, thought-provoking data visualizations.

If you’ve followed traditional orthodox advice and have invested part of your money in stocks, then this has been a rough week for you. We’re sending you grace and love and we understand if you need a nice strong drink.

If you live under a rock, or are lucky or paranoid enough to have placed all your money in cash under your mattress, then let’s recap. Last week, US President Donald Trump announced sweeping tariffs on just about every country and territory (even some surprising ones) in the world—with only a few notable exceptions.

Almost immediately, the markets reacted. Since Trump’s inauguration, over $11T in stock market value has been erased—and over half of that disappeared in just two days last week. Investors and businesses fear the impacts that sweeping tariffs – ranging from 10% to what could amount to over 100% for China – will have on global economic growth.

The United States is shaking the global trading system in a way that only it can. Of the 25 largest commercial relationships worldwide in 2023, nearly a third involve the US—including the top three, with Mexico, Canada, and China.

The only other Latin American appearance in the world’s Top 25 is the Brazil-China economic relationship.

China absorbs roughly a third of Brazilian exports – especially of soy, iron, and oil – and has been Brazil’s largest trade partner since 2009. In fact, Brazil is one of the few countries worldwide to maintain a trade surplus with China, and the country may well benefit from rising US-China tensions (and soybean prices) as it has in recent years.

Beyond that? No further Latin American appearances, in contrast to 12 bilateral trade appearances for China (including with Hong Kong) and 8 for Germany. Which brings us to a final point we’d like to raise, regarding trade diversification.

While it’s great that Brazil and Mexico have forged deep commercial ties with respective superpowers, this year has shown – if nothing else – that overreliance on one trade partner is dangerous. Mexico in particular has been rocked by consistent tariff threats from the US, and is largely at the mercy of Trump’s whims on security, immigration, or anything else.

Contrast this with Germany, a fellow industrial powerhouse, which makes multiple appearances on this list owing to its intricate trading relationships with European neighbors such as the Netherlands, France, Poland, Italy, Austria, and the Czech Republic.

Many of these countries have fewer resources and people than mid-sized Latin American countries such as Argentina, Colombia, or Peru. With time, could Latin America see a comparable level of economic integration and commercial diversification?

Something to consider. For now, rest in peace to your portfolio.

Comment of the Week 🗣️

Rodrigo endorses our recommendation to build trust — that means both to trust more and be trustworthy — for better outcomes in our region.

Feedback or chart suggestions? Reply to this email, and let us know!

Join the discussion on social media, where we’ll be posting today’s charts throughout the week.