(Bloomberg) -- China’s emergence as a global economic rival to the U.S. is perhaps most obvious in Latin America.
The U.S. in recent years has lost its status to China as the top trading partner in parts of Latin America, such as copper-rich Chile and agriculture and mining powerhouse Brazil. Now, all the uncertainty surrounding U.S. President Donald Trump’s plans – from building a southern border wall, to re-freezing Cuba relations and exiting the Paris climate change accord supported by Latin America – could give an opening for China to seize more ground in the region.
Meanwhile the Chinese government is ready to expand its dominance in a region already supplying it expanding economy with everything from farm goods to raw materials.
China in 2009 surpassed the U.S. as Brazil’s largest export market, as South America’s biggest economy stepped up shipments of everything from iron ore to soy beans. China a year later become Latin America’s leading trade partner, when you omit Mexico and take into account only the South American nations.
“China has successfully established a really remarkable economic presence in the region over a relatively short period of time,” according to Margaret Myers, director of the Inter-American Dialogue’s Latin America and the World Program.
Mexico is an exception that still looks to the U.S. for most of its commerce, thanks in some measure to the North American Free Trade Agreement’s zero-tariffs regime. The country’s exports to the U.S. totaled $303 billion in 2016 compared with just $5.4 billion to China.
But China’s encroachment in the region could accelerate if Trump makes good on threats to withdraw from Nafta, which would result in higher tariffs between Mexico and the U.S. Mexico already is making contingency plans to increase trade with non-U.S. nations in case the trade pact dissolves and the country’s proximity to Latin America makes it a natural pivot point.
To be sure, that doesn’t mean that China would completely benefit from a souring of U.S.-Mexico relations. China largely seeks commodity imports from Latin America, whereas Mexico’s biggest exports to its northern neighbor are cars and car parts as well as electronics – items that China already produces in abundance.
But the dissolution of Nafta could create a vacuum in Mexico that China would try to at least partially fill.
“Certainly Mexico will be interested in collaborating more with China” -- as well as other countries -- if Nafta ends, according to R. Evan Ellis, a professor of Latin American studies at the U.S. Army War College. “Mexico’s partnership with the United States has really been a bulwark against the advances of China in the region.”
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