Donald Trump and his protectionist policies: How does Latin America end up taking advantage of this situation? | Peru | China | ECONOMY
Last Monday, Donald Trump took office as president of the United States. His second term as US president generates one of the most uncertain scenarios in global history, considered Daniel Velandia, chief economist at Credicorp Capital.
At the conference ‘Economic perspectives and projections for 2025’, the expert pointed out that the new administration has raised concerns, given campaign promises related to the application of tariffs on products from abroad and with higher rates for China, Mexico and Canada . Likewise, another concern is the pressure to deport immigrants, which can affect Mexican and Venezuelan citizens.
LOOK | LAP on new Jorge Chávez: “We are working to make it under a phased operation”
For this reason, he explained that the International Monetary Fund (IMF) considers different effects of Trump’s possible measures and his reactions, within the world economyexpected to grow 3.3% in 2025 and 2026.
By 2026, Velandia pointed out, if the United States applies the policy of raising tariffs, this could have a slowing effect of 0.2 percentage points on the growth of global gross domestic product (GDP). If there is a retaliatory response from the affected countries, especially China, Mexico and Canada, this lower growth could be around 0.5 points.
Likewise, with mass deportation policies in USAgrowth can decrease by up to one percentage point to the world’s economic growth. The loss could be greater if the reductions in interest rates are not continued, due to fiscal or inflation issues, he added.
LOOK | Alonso Segura: “It would be nonsense for the government to modify the fiscal rule again”
“One can conclude that Donald Trump’s victory puts us in one of the most uncertain contexts that the world has experienced in its history, at least since the Second World War.”, he expressed.
On the other hand, he pointed out that the market, based on a Bank of America survey, expects that in the next 12 months the United States will have greater economic growth due to possible measures such as a reduction in taxes, deregulation and lower energy prices. . However, it could be raised by almost a percentage point by raising tariffs for Mexico and Canada.
Opportunity for Latin America
The possible protectionist measures of the Trump administration could generate changes in the dynamics of international trade. And, in Velandia’s opinion, the policies of the new president of the United States aim to have internal growth without depending on the exterior. That is, detach yourself from the rest of the world.
Tensions could also arise between the United States and China in the following years. As recalled, one of Trump’s measures announced in his campaign was to apply a 60% tariff on products from the Asian giant.
LOOK | Investments and development projects revalue the Historic Center of Lima, what are they?
To avoid conflict scenarios, both Asia and Europe would be forced to look for new scenarios, Velandia considered. That is why the Credicorp Capital expert pointed out that Latin America It can benefit from this situation, especially in the trade of raw materials and agriculture with those two regions. An example of this, he mentioned, is Brazil with its production of wheat and corn.
Furthermore, the Port of Chancay strategically positions Peru by being closer to China than to Europe by a couple of days in maritime trade, he added.
“Peru is quite well positioned. There have been recent developments, especially the Port of Chancay, which places Peru in a very favorable strategic point for what is to come.”, he expressed.
Peruvian scene
For this year, the Peruvian economy would grow 2.8%, estimated Credicorp Capital. According to Velandia, this level of growth would be based on the effect of lower inflation.
However, he considered that higher levels of economic growth are needed, although this is not achieved due to structural factors, such as informality and political uncertainty.
LOOK | 45% of companies require intermediate English: young people lead training
In a negative scenario, if China’s economy grows at 4% and the international price of copper falls between 10 or 20 cents, to US$4, Velandia estimated that the Peruvian GDP would not be growing 2.8%, but 2.3%. .
On the other hand, the specialist maintained that the annual fiscal deficit is expected to end the year at 2.6%, recognizing that it is a correction of one percentage point compared to 2024. Despite this, the fiscal rule would still continue to be violated.
By 2026, being an electoral year, Peru could get closer to the fiscal goal, he considered. For this reason, Velandia indicated that the government will have to make a significant fiscal effort in order to maintain the objective of maintaining the convergence of accounts.
