Colombia facing Trump’s tariffs: drop in sales and lower competitiveness

U.S. President Donald Trump delivered a speech in which he announced the imposition of new tariffs on imports, calling this day “Liberation Day”. Trump’s tariffs seek to reduce the U.S. trade deficit, which in 2024 reached $1.2 trillion, and encourage domestic production.

The measure establishes a minimum tariff of 10% for all imports, with higher rates for certain countries depending on their trade practices. China will face a tariff of 34%, the European Union 20%, India 26%, Vietnam 46%, and Japan 24%. Mexico and Canada appear to have special treatment as in recent days Trump had already raised tariffs on these countries.

Trump’s tariffs were justified as a response to what he considers unfair trade practices, including non-tariff barriers and currency manipulation by other countries. He argued that these measures are necessary to revitalize U.S. industry and create jobs.

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The international community has reacted with concern, warning of the risk of a global trade war and possible retaliation that could negatively affect the world economy. Leaders of affected countries, such as Australian Prime Minister Anthony Albanese, have called Trump’s tariffs illogical and harmful, and have expressed their intention to maintain fair trade standards without resorting to immediate retaliation.

Economists and analysts fear that these protectionist policies could trigger an inflationary spiral, affecting both consumers and businesses in the U.S. and abroad. As the Federal Reserve warns by keeping interest rates unchanged.

The countries that will suffer the highest increases are those that have comparatively less trade with the United States, such as Cambodia (49%), Sri Lanka (44%), Madagascar (47%), Myanmar (44%) and Laos (48%).

In the table presented by Trump during his presentation of about an hour, Russia does not appear and the European Union is placed at 20%. Behind Trump’s tariffs is the idea that the United States was cheated by all the countries in the world and that the measure will attract investment to that country.

Many of the imports made by the United States come from U.S. companies that produce abroad, taking advantage of cheap labor and the proximity to expanding foreign markets such as China.

Trump’s tariffs for Latin America

Trump’s tariffs will affect several Latin American countries, including Colombia. This measure directly impacts Colombia’s main export market, which in 2024 represented sales of USD $14,335 million, equivalent to 29% of its total exports.

The U.S. administration detailed that the base tariff of 10% will come into effect this Saturday, April 5, while the country-specific levies will begin to be applied as of April 9. Although the tariff is the same for most Latin American countries, Nicaragua and Venezuela face higher tariffs, and Mexico and Canada are temporarily exempt.

Impact of the measure on Colombian exports

In 2024 Colombia exported USD $14,336 million, equivalent to 13,720 tons. Assuming that exports have a similar behavior by 2025, we can calculate what would happen if demand remains constant (inelastic).

In this case, the value of Colombian exports to the US would increase to USD $15,769.6 million due to the 10% tariff, while the quantity exported would remain at 13,720 tons. In other words, Americans would have to pay USD $1,433 million more to consume the same amount of Colombian products.

On the other hand, in the event that they stop consuming the same percentage of the increase in prices, the quantity exported would decrease by 10%.

In this exercise, Americans would consume 12,348 tons of Colombian products for the same price. They would stop buying about 1,372 tons from Colombia.

In this exercise, Americans would consume 12,348 tons of Colombian products for the same price. They would stop buying about 1,372 tons from Colombia.

In conclusion, if demand remains constant, U.S. buyers will have to pay more for Colombian products. However, if consumers adjust their behavior to higher prices, exports could be significantly reduced.

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The Colombian government’s reaction

The Colombian government has reacted meekly to Trump’s tariffs. President Gustavo Petro expressed that this measure could be a big mistake, arguing that generalized protectionism does not guarantee economic growth.

For her part, Foreign Minister Laura Sarabia emphasized that the measure is not directed specifically against Colombia or Petro’s government, and insisted that the country will remain a competitive player in the U.S. market.

Experts express concern about Colombia’s vulnerability due to its trade dependence on the U.S. and limited export diversification.