Impact of Trump’s tariffs on Colombia

The U.S. president signed an executive order to impose new tariffs on imports from its major trading partners. Trump’s tariffs are 25% on most products from Mexico and Canada, and 10% on goods from China.

Prior to the announcement of Trump’s tariffs against his northern neighbors, he negotiated with Venezuela to reduce U.S. energy dependence on Canada, and visited Panama to curb China’s growing influence in the region.

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Although the measure was to apply from February 4, 2025, one week after the signing of the executive order, Trump suspended its application for a month in order to negotiate with his neighbors and avoid immediate retaliation.

This tariff strategy not only threatens to destabilize the economy of the countries concerned, but also responds to a series of geopolitical moves aimed at regaining US hegemony in the international context.

Trump’s tariffs put international markets on alert

The United States, the world’s largest importer of goods, decided to attack Mexico, Canada and China, which are among its five main trading partners, with tariffs.

The tensions generated by Trump’s tariffs could disrupt key supply chains in sectors such as automotive, technology and agribusiness, affecting not only North America, but also Europe and Latin America.

If an agreement is not reached, the economic implications for Colombia are worrisome. Currently, 26% of Colombian exports are destined for the United States, which also accounts for 42% of foreign direct investment in the country and more than 50% of remittances from abroad.

After the United States (29%), Panama (8.7%), India (5.39%) and China (4.8%), Mexico was the fifth destination for Colombian exports with a 4% share in 2024, while Canada ranked 16th with a 1.3% share. This places North America as the main destination for Colombian exports.

Potential consequences

Trump’s tariffs will generate effects on multiple fronts. First, the increase in the price of imports of products originating in Mexico, Canada and China will impact the cost of living in the United States. Household appliances, electronic equipment, automobiles, communication equipment and even some foods will increase in price, which will increase inflation.

Faced with this scenario, the Federal Reserve (FED) will respond with higher interest rates, which could slow down the US economy and reduce demand for imported products, affecting trading partners such as Colombia.

The fact that the FED will keep interest rates high implies that economies such as Colombia’s will face difficulties in their public accounts. With a trade balance deficit, high interest rates make their financial obligations more expensive, increasing the cost of debt service.

On the other hand, goods that fail to sell in the North American market will reach other destinations at low prices, generating a direct impact on domestic production in the receiving countries.

Latin America and Colombia have experienced this phenomenon before: global restrictions on Chinese steel trade caused the region to be flooded with steel at below-market prices, severely affecting local industries.

In the current context of low economic growth, this means that economies such as Colombia’s will not have a favorable situation on the international front, which could aggravate their current fiscal, macroeconomic and growth problems.

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China: an emerging alternative for Colombia

As the United States tightens its trade policies, China has consolidated its presence in Latin America, and Colombia is no exception.

The recent incorporation of Buenaventura in Cosco Shipping’s new route between Shanghai and Chancay represents a key opportunity to strengthen trade with the Asian giant. This strategic alliance will facilitate the export of Colombian products, such as coffee and processed sugar, to the growing Chinese market.

In addition, Colombia’s possible entry into the Silk Road and its candidacy to join the BRICS reinforces the country’s trade diversification. Although the Colombian government has not actively promoted these changes, the global situation is pushing Colombia towards a closer relationship with China.

This evolution could mitigate the negative effects of Trump’s protectionist measures, offering new opportunities for economic development and infrastructure investment.

What are Colombia’s options?

Given this scenario, Colombia must diversify its trade relations and reduce its dependence on the United States. Strengthening ties with other economic blocs, such as the BRICS and its Latin American neighbors, is a viable option.

In addition, it is necessary to boost industrialization and domestic production to mitigate the effects of external protectionist policies.

The Colombian government should also take advantage of multilateral spaces to defend its interests and avoid leaving its economy at the mercy of unilateral decisions by foreign powers. The current crisis is a clear warning: Colombia must take measures to guarantee its economic stability and reduce its vulnerability to abrupt changes in the trade policies of its main partners.