President Javier Milei, Argentine libertarian, arrived at the helm in late 2023 with an uncompromisingly anti-China policy, terming the country a communist "assassin" and pledging to curb bilateral ties. Alas, his campaign oratory, quite apart from reality, Argentine shipments of key goods such as soybeans and lithium soared by 15% within his first year at the presidency. (reuters.com)
This pragmatic reorientation by an ideologically aligned United States leader draws attention to a significant challenge facing President Donald Trump. In resource-rich South America, burgeoning trade relations have profoundly boosted China's influence, potentially tempering U.S. influence in the continent.
Trump's Trade Strategy and Its Reception in South America
President Trump has adopted a militant approach to redesigining world trade, making threats and deploying tariffs to encourage partners to set American interests at the top. His methods have managed to pull concessions from the likes of Colombia, Panama, and Mexico, with Brazil in line for potential new steel tariffs. (reuters.com)
But in South America, China's wide trade presence offsets the impact of Trump's actions. Harsh measures like these could drive countries to turn to less unstable alternatives, such as China, Europe, or the BRICS bloc—Brazil, Russia, India, China, and South Africa. A senior Brazilian diplomat noted that Brazil's $30 billion trade surplus with China is many times larger than its economic relationship with the United States, making China a pragmatic business partner. (reuters.com)
China's Supremacy in South American Trade
South America's exports to China have risen more than double in the past decade, led by commodity titans like Brazil, Chile, Peru, and Argentina. Exports to the United States, meanwhile, have grown modestly. This is a reflection of China's growing economic influence in the region, eclipsing traditional U.S. supremacy. (reuters.com)
Argentina's Shifting Attitude towards China
President Milei's initial anti-China hostility is now a more pragmatic relationship. During the election campaign on the promise of cutting ties, Milei now considers China a "very interesting" trading partner who demands nothing from anyone. Argentina in 2024 extended a currency swap agreement with China worth $5 billion until 2026. (ticotimes.net)
This change is reflective of Milei's value for China's economic significance to Argentina. Argentina's second-largest export market, after Brazil, and primary source of imports is China. Soybeans, beef, barley, prawns, shrimp, and lithium carbonate are the primary exports to China, and motorbike and mobile phone components are the imports. (chinaglobalsouth.com)
China's Strategic Investments in South America
China's footprint in South America extends beyond commerce; it encompasses massive investments in industry and infrastructure. Chinese automaker BYD, for instance, invested $1 billion constructing an electric car plant in Camaçari, Brazil, to provide a boost to the local economy following Ford's departure. The venture hit a snag when 163 Chinese workers were rescued from allegedly degrading conditions akin to slavery, revealing the complexity of Chinese overseas investments. (ft.com)
China state-owned Cosco Shipping is constructing a new megaport in Peru's Chancay, which will cut the sea legs to Asia for Peruvian and Brazilian goods. The construction is an indicator of China's commitment to expanding the region's trade infrastructure. (reuters.com)
U.S. Response and Strategic Considerations
China's increasing footprint in Latin America has been complained about by the United States. In February 2025, U.S. Secretary of State Marco Rubio visited the region, cautioning against expanding Chinese influence. Completely undeterred by these threats, several Latin American countries have solidified their economic and investment relations with China, as Chinese-backed mining operations began in Bolivia and Argentina. (cfr.org)
Chile, the globe's biggest copper producer, is keeping an eye on a U.S. probe into whether to raise new tariffs against copper imports. The investigation, initiated by President Trump, aims to push back against China's apparent copper market dominance. New tariffs would target large mining operators in Chile, such as BHP, Glencore, Anglo American, and state-owned Codelco. (reuters.com)
China's Soft Power and Cultural Diplomacy
Aside from economic interactions, China has been strengthening its soft power in South America through cultural diplomacy. Some of these endeavors involve setting up Confucius Institutes, advancing Chinese language and culture, and providing scholarships to South American scholars. These are intended to create goodwill and build bilateral ties.
Implications for South America's Development
China's growing presence in South America presents both challenge and opportunity to the region's development. Chinese investments in energy, infrastructure, and manufacturing sectors have resulted in greater economic growth and job creation. But there have also been concerns over labor conditions, the environment, and long-term sustainability of having a major trading partner.
Conclusion
China's increasing trade hegemony of South America poses a multi-layered threat to the United States' influence in the region. Though stringent trade policies implemented by President Trump aim to rebalance global trade in favor of the United States, South American nations are gradually finding their way into China's open arms, smitten with booming trade volumes and massive investment. The reversal calls for the United States to adopt a more measured approach, balancing strategic interests without disrupting the changing dynamics of the economic alliances between South America.