EuroFinance

For corporate treasurers operating across Latin America, geopolitics has become a practical concern. The contest between the United States and China for influence creates direct questions around supply-chain exposure, counterparty risk, and the durability of trade and infrastructure arrangements that support cross-border business. At EuroFinance’s 30th Annual International Treasury & Cash Management Summit in Miami, Benjamin Gedan, senior fellow and director of the Latin America Program of the Stimson Center and Margaret Myers, managing director, Institute for America, China, and the Future of Global Affairs (ACF) of Johns Hopkins University, outlined the state of that contest, highlighting the complexities of geopolitics in the region.

A sixth phase—and a quieter China

Myers described the current moment as the sixth distinct phase of the China-Latin America relationship. Two forces are reshaping it simultaneously: China’s own economic conditions and industrial policy on one side, and pressure from the US on the other. This has resulted in a China that is still engaged across the region but operating very differently from a decade ago.

The large-scale infrastructure loans and major Belt and Road projects that defined Chinese engagement around 2015 have given way to something quieter. “We aren’t seeing that with as much intensity,” Myers said. In their place: private equity, behind-the-scenes public-works deals and growing activity in sectors including AI, pharmaceuticals and machinery. Areas that are less visible but no less consequential for businesses operating in the region.

China’s own economic health is a key driver of this shift. The capital that once funded sovereign lending at scale is no longer available in the same way. At the same time, Myers noted, China is now exporting excess industrial capacity across a wide range of sectors — steel, pharmaceuticals, machinery, electric vehicles, solar panels — and doing so “at a speed and scale that is new.” Where that capacity intersects with existing Latin American industries, the view among local producers is that competing is increasingly impossible.

“A 1% decline in Chinese GDP translates to a 1% decline in Latin American GDP. They are that closely linked economically, ” Myers said.

Trade dependency: the bond that holds

Whatever the shortcomings of China’s infrastructure diplomacy, the trade relationship gives Beijing enduring leverage.

Gedan cautioned, however, against overstating the asymmetry. China has a genuine interest in the region’s critical minerals, lithium in Argentina, Chile and Bolivia, rare earths in Brazil, and that gives Latin American governments more influence than is commonly assumed. He pointed to anti-dumping investigations in Chile and Brazil, and the high tariffs Mexico imposed on Chinese imports, as evidence that the region has exercised that influence without provoking retaliation. “Cumulatively, but even in some cases bilaterally, there’s quite a bit more influence that Latin America has than maybe most understand,” he said.

He also noted that conservative political victories in countries such as Argentina and Chile have not, despite some commentary, caused a strategic shift. The reason is straightforward: those governments have no interest in losing access to Chinese markets. China, he said, is skilled at using economic dependence as a weapon, noting that a Chilean agricultural export could find itself failing a phytosanitary standard if relations soured. And the United States is not going to replace China as the buyer of Brazilian iron ore or Argentine soybeans.

Panama: a material loss, and a warning

The most visible flashpoint in the US-China contest over Latin America is Panama. China, Gedan noted, suffered a genuine material loss when the contract held by Hong Kong-based Hutchison over ports on either side of the Panama Canal was rescinded. China is the second-largest user of the canal, and these were commercially valuable concessions. “There was embarrassment,” he said, adding that Beijing felt a need to prevent other Central American countries from following a similar path.

Myers described Panama as a country now forced to take sides, one that wants to maintain Chinese commercial ties, particularly in finance and infrastructure, but has effectively aligned with the United States. She highlighted other flashpoints carrying similar logic: Chancay port in Peru, space facilities in Argentina. US officials at embassies across the region have been explicit, she said, that assets seen as security threats could be at risk in the event of a future military confrontation between the US and China, a scenario that, while hypothetical, is being discussed openly. Sanctions and travel restrictions are already being used against individuals involved in projects of concern to Washington.

Despite all this, Gedan’s assessment was that China has largely continued business as usual outside Panama. The Monroe Doctrine, as articulated by the Trump administration, has not yet produced the alternative infrastructure finance that would give Latin American governments a genuine choice. “Until it does, China will continue to succeed,” he said.

The Monroe Doctrine

Myers described the so-called Monroe Doctrine of the Trump administration not as a coherent strategy but as “an amalgamation of a bunch of different interests” among those advising the administration. The result, she said, is a fragmented and inconsistent approach to the region, one shaped heavily by who holds key positions at any time, including the Secretary of State’s longstanding focus on Cuba.

Gedan illustrated the ideological character of the approach with a concrete example: a major security summit hosted at a Trump property in Florida was designed to bring together Latin American armed forces to confront organised crime — a goal broadly shared across the region. But Brazil, Mexico and Colombia were not invited, because their governments are led by left or centre-left figures. “The Monroe Doctrine can succeed,” he said, but its current design makes it dependent on ideological affinity rather than shared interests.

The presidential runoff in Colombia in June, and the elections in Brazil in October will, he said, determine whether the conditions for the Monroe Doctrine exist. A shift in either country could meaningfully change Washington’s ability to build the coalitions its regional strategy requires. (In Colombia, a conservative candidate eager for close security cooperation with Washington will be the next president.)

USMCA: instability by extension

 The review of the United States-Mexico-Canada Agreement increases uncertainty for treasurers with North American exposure. Gedan noted that Mexico is now the United States’ largest trading partner, yet the relationship is overlooked and poorly understood at the political level. He described any of three outcomes as plausible: a multi-year renewal, a year-by-year extension, or a collapse into bilateral agreements that would dismantle North American integration.

His best guess was a one-year extension, repeated — which he acknowledged is “a recipe for instability” for any business making long-term investment decisions based on tariff-free access and regulatory continuity. The tariff principle, he noted, has already been violated.

On the Chinese automotive supply chain — a major issue in the renegotiation — Myers noted the complexity. Her research found that Chinese companies have invested less directly in Mexican manufacturing than often assumed, with more activity consisting of exports of whole vehicles and parts. She noted a reduction in Mexico’s own low-cost parts production capacity, displaced by lower-cost Chinese supply. The rules-of-origin question, she said, depends heavily on how adamant the administration is about excluding Chinese participation from North American supply chains.

Advice for treasurers: expect the pendulum to swing

 Asked for advice to corporate treasurers navigating this environment, Gedan pointed to what he called “pendularity” — the tendency of politics across the Western Hemisphere to swing sharply when governments change, because polarisation means there is little consensus on public or economic policy. “Be prepared for pretty radical shifts in many of these countries,” he said, cautioning against seeing election results as a lasting trend.

Myers closed on a note she acknowledged was not optimistic. The US approach to the region is fragmented and will create a varied, country-by-country dynamic heavily influenced by whoever holds power at the time, with limited American support for what the region is actually demanding. And China, she said, is not coming to the rescue in the way many in the region are hoping. Funding for Belt and Road in Latin America has declined. “The capital is just not there,” she said — China’s capital flows to Latin America have slowed, even as activity for the Belt and Road Initiative increases elsewhere.