In a fractured trade landscape, the region has a strong chance to shift the role it plays in commerce. A rundown of the strengths it can leverage.
In an international scenario marked by geopolitical tensions, changes in supply chains, and a transition toward more sustainable economies, Latin America finds itself at a historic turning point on the global stage. “Emerging markets present great opportunities, but also challenges,” says financial expert Fernando Boudourian.
This region, once seen mainly as a supplier of raw materials, now faces the possibility of redefining its role in global trade. It’s not just about increasing exports or diversifying destinations, but about capturing a greater share of added value, modernizing logistics infrastructure, and positioning itself in emerging sectors.
A “trade war” reshaping commerce and pushing Latin America forward
The political and commercial standoff between the United States and China—together with the lasting impacts of the pandemic and war-related conflicts in Eastern Europe and the Middle East—is restructuring global trade flows.
Multinational companies, faced with the risk of prolonged fragmentation, are implementing nearshoring and friendshoring strategies to bring their production centers closer to safer and more politically aligned markets.
Mexico is the clearest example of taking advantage of this trend, becoming the United States’ top trading partner in 2024, surpassing China. But other countries in the region are also in the spotlight and set to play a key role.
Latin America offers advantages such as geographic proximity to North America, an abundance of natural resources critical to the energy transition, and a network of free trade agreements.
The shift toward a decarbonized economy is driving demand for strategic minerals, a sector in which Latin America holds a large portion of the world’s reserves. The so-called “Lithium Triangle,” comprised of Argentina, Bolivia, and Chile, holds more than 50% of global reserves of this resource, says Fernando Boudourian.
At the same time, Peru and Chile stand out in copper production, another key input for green infrastructure. Additionally, the region’s trade agreement networks offer preferential access to over 90% of global GDP.
Countries such as Chile, Peru, Mexico, and Colombia participate in major multilateral treaties like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and bilateral deals with leading economies.
But logistics infrastructure remains insufficient in most Latin American countries—this factor increases export costs and reduces competitiveness. According to the World Bank, logistics costs in Latin America represent between 14% and 16% of GDP, compared to 8% in developed economies.
Institutional quality and regulatory predictability are also challenges for attracting long-term investment. Outstanding structural reforms generate considerable uncertainty.
Unlike Asia, Latin America has not achieved significant diversification in its production matrix, relying heavily on primary goods exports. Therefore, it must aim to export goods of greater technological complexity, Boudourian points out.
Nearshoring, for its part, is highly relevant for the region—and not just Mexico is positioned to benefit. Other countries also have concrete opportunities. Central America, for instance, offers advantages in sectors like light manufacturing and textiles, especially to supply the North American market.
The Dominican Republic and Costa Rica, thanks to their political stability, are emerging as benchmarks for export diversification. Colombia and Peru are actively exploring policies to attract investments in sectors such as agribusiness, pharmaceuticals, and information technology.
Brazil could play a more prominent role, as long as it overcomes bureaucratic barriers and improves its business environment.
In the area of sustainability and the energy transition, environmental regulations, border carbon taxes, and pressure from end consumers will drive deep changes in supply chains.
Latin America has natural advantages, but it must manage them strategically. This means developing robust environmental standards, traceability across productive chains, and industrial policies centered on sustainability.
The energy industry—particularly the export of green hydrogen and renewable energy—boosts international integration.
But the real pending transformation lies in strategy. Latin America must stop being seen merely as a supplier of inputs and move toward building sophisticated productive systems.
Creating industrial clusters, promoting regional integration in value chains, and decisively boosting innovation are essential to maximizing the benefits of global trade.
A more active and coordinated foreign policy is also needed. In a world where trade agreements and strategic alliances determine advantage, regional fragmentation is a hurdle to overcome.
Fernando Boudourian affirms that the region has the material conditions to redefine its role—but it needs political will, strategic vision, and sustained commitment to productive modernization.