The world uncertainty for the restrictions on the trade of US president, Donald Trump, will somehow affect all Latin American countries, Citi Research said Wednesday in his first 2025 projections report.
“All Latin American countries are vulnerable to a greater or lesser extent to the global uncertainty that comes due to the measures of the Trump administration,” said Citi Research chief economist for Latin America, Ernesto Revilla.
According to the report, the most vulnerable country in the region is Mexico “because almost all the issues that concern Trump go through Mexico.”
In order to evaluate this possible impact, the CITI created a vulnerability index based on the variables that most invokes the new US government when imposing tariffs on a country.
The first is the commercial balance because “if a country shows a surplus with the United States, that is a cause for concern because Trump’s presidency wants to reduce those deficits through rates,” Revilla said.
In that sense, “the most vulnerable is Mexico for its surplus with the US, which since the FTA was signed has always been growing,” said the expert, who added that “few other countries in the region have a vulnerability in commercial matters” for their unfavorable balances against the United States.
Migration, Drugs and China
Other variables are migration and drug trafficking, because if a country is a transmitter in one of those two phenomena “has vulnerability.”
Bi migratory flows are particularly vulnerable Mexico and Central American countries, while drug production and trafficking is a phenomenon that can affect Colombia in the eyes of the Republican administration, he added.
The CITI also considers the factor of remittances because “the more receives a more vulnerable country is to any change that may affect the influence of dollars.”
“However, we have not yet seen a shock in remittances,” said the main economist of CITI for Colombia, Peru, Central America and the Caribbean, Esteban Tamayo.
The relationship with China is another factor that can make a country vulnerable because the new US government, “is much more aggressive in trying to limit China’s policy in the region”, where the Asian giant has increased its presence through large investments.
Finally, the sign of each government can be another element of vulnerability because “a greater approach of right -wing governments such as that of Javier Milei (Argentina) or Nayib Bukele (El Salvador) to Republican circles has already been seen, while the leftist governments will have a greater antagonism with the foreign policy team of President Trump,” said Revilla.
Risk map
After analyzing these variables, Mexico heads the vulnerability table, with 9.2 points over ten, followed by Brazil (7.5); Honduras and Colombia (7); Peru and Ecuador (6); Chile (5.5); El Salvador (4.8); Argentina and the Dominican Republic (4.7); Panama (3.5) and Uruguay (3).
“Brazil is vulnerable because it has high rates (commercial) and a government that is not so friendly to the second Trump administration,” added the expert.
According to Revilla, “the level of uncertainty will be maintained by an indeterminate time until we have more clarity in the specific policies of each country.”
“We start from a United States that is at a time of deep economic, political and even geopolitical transformation,” he added in reference to Trump government changes who on Wednesday must announce a package of global tariffs whose scope is unknown.
Despite the uncertainty that reigns in international trade, the Citi Research predicts that the economy of Latin America as a whole will grow this year 2.2% and in 2026 2.4%, a result slightly higher than 2.0 of 2024.
This performance is conditioned by Brazil and Mexico, the two largest economies in the region, “which will have an important slowdown.”
According to bank projections, Brazil grew last year 3.4% but will fall to 2.2% this year and 1.8% in 2026 for its high interest rates, while Mexico will go from 1.5% it had in 2024 to 0.2% this year and must recover in 2026 with a 1.6% growth.
“Mexico will grow this year 0.2% for being the most exposed to President Trump’s policies in commercial imbalances, migration and drug trafficking,” said the expert.
With EFE information
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