Industry Braces for Hard-Line Approach to Region

[ad_1]

Lawyers who work in Latin America and the Caribbean are bracing for a hard-line approach to the region when Donald Trump takes office in January.

Trump’s second run leading the U.S. is expected to bring a crackdown on irregular immigration and a surge in trade tensions that will weigh particularly hard on Mexico. On Monday, the incoming president threatened to slap a 25% tax on all products from Mexico until the country stops drugs and migrants from entering the U.S.

But Mexican President Claudia Sheinbaum suggested Tuesday that her country could retaliate with tariffs of its own, potentially creating a trade war between the neighboring countries.

“Trade policy, mainly in Mexico, could be very active,” said Francisco Sánchez, co-head of the international trade practice at Holland & Knight.

Sánchez, who served as the U.S. undersecretary of commerce for trade under President Barack Obama, splits his time between offices in Tampa and Washington, D.C., working in close coordination with the firm’s large offices in Colombia and Mexico.

It is widely anticipated that Trump will use tariffs, or the threat of tariffs, to compel Mexico to stem the flow of illicit drugs and migrants reaching the U.S. border.

However, Trump’s vow to impose tariffs may be merely a threat, at least for now. The U.S.-Mexico-Canada free trade agreement forbids the countries from imposing tariffs on one another.

Trump could use executive powers to override the treaty, but such a move would come with repercussions, as the two economies are deeply intertwined. Tariffs on goods imported from Mexico could also end up hurting U.S. companies and consumers, resulting in layoffs and inflation in the U.S. Auto plants on both sides of the border, for example, are heavily interdependent, with each using parts and components produced in both locales. Economists have said production lines for U.S. automakers could be hit hard.

At the same time, the U.S.-Mexico-Canada free trade agreement is up for review in 2026. In exchange for renewing the trade accord, the Trump administration is expected to demand modifications to rules of origin for the automotive industry and to call for restrictions on Chinese companies operating within North America.

“I have to believe that part of that conversation will be making sure that China is not using Mexico as a conduit to circumvent whatever you’re doing to get China to play fairly,” Sánchez said.

Scores of Chinese companies have set up shop in northern Mexico in recent years in an effort to bring production closer to the U.S. market. Those products are then considered Mexican, allowing Chinese firms to bypass U.S. tariffs and sanctions imposed on Chinese goods amid the continuing trade war between those two countries.

The U.S. relies heavily on Mexican output, though. The country surpassed China in 2023 to become the biggest exporter of goods, including fresh fruits and vegetables, to the U.S.

Brazil is also cozying up to Beijing, potentially setting up Latin America’s largest country for clashes with the Trump administration.

The country exports significant amounts of commodities such as soybeans and iron ore to China, and now Brazil is courting Chinese investments in infrastructure, too.

But the $2.3 trillion Brazilian economy is so dynamic that international lawyers anticipate they will be busy in Brazil regardless of who is in the White House.

“Brazil is so large and self-sustaining that I think it’s its own animal,” said Yosbel Ibarra, the co-managing shareholder of Greenberg Traurig’s Miami office.

Ibarra recently helped Greenberg Traurig establish an office in São Paulo. That office, he said, is thriving, driven mostly by Brazilian clients who are looking to do business outside of Brazil.

Change Ahead Francisco Cerezo, chair of the Latin America practice at DLA Piper, gathered dozens of lawyers in Miami last Friday for a chat with Michael McKinley, a former U.S. ambassador to Peru, Colombia, Afghanistan and Brazil.

“It’s no secret that we expect there to be differences in public policy, foreign policy, trade policy, economic policy under a Trump administration from the Biden administration,” Cerezo said during his conversation with McKinley.

“If you were to see the past as prologue, then maybe that sheds some light on what could be expected under a [second] Trump administration,” he added.

McKinley said Latin America needs to be seen in the broader context of what’s happening in global policies related to the economy, national security and conflicts underway in places such as Gaza and Ukraine.

“The shift in global priorities, especially since the pandemic, towards a focus on everything from energy, green energy, to food production, critical minerals, rare earths has given Latin America new opportunities and new prominence in the context of the global economy,” McKinley said.

In recent years, for instance, the Gulf states have made strategic investments to secure minerals and food from South America, where China has also significantly expanded its influence via investments and infrastructure projects.

“We really are at a moment in which Latin America can surge ahead,” McKinley said.

Competition for rare earth minerals such as lithium is expected to drive deals in South American countries such as Argentina in the coming years as global powers seek to secure reliable sources of these critical elements.

Meanwhile, the nomination of U.S. Sen. Marco Rubio, R-Florida, for the role of secretary of state is seen as a sign that the administration plans to sharpen its focus on Latin America and the Caribbean.

With Rubio in that post, “we’re hoping for greater engagement with Latin America, so I’m cautiously optimistic,” Greenberg’s Ibarra said.

Trump’s choice for the top diplomat has deep ties to the region, but Rubio, the son of Cuban exiles, has often taken a hawkish tone. He has been a vocal critic of China’s expanding influence in Latin America and of antidemocratic rulers in countries such as Venezuela.

Lawyers also anticipate that the U.S. might step up support for development bank financing for infrastructure projects as a counterweight to Chinese influence in the region.

[ad_1]

Source link : http://www.bing.com/news/apiclick.aspx?ref=FexRss&aid=&tid=674728cb9f544c528a3a10ff07827c3f&url=https%3A%2F%2Fwww.law.com%2Famericanlawyer%2F2024%2F11%2F27%2Ftrump-and-latin-america-industry-braces-for-hard-line-approach-to-region%2F&c=3105509652914381044&mkt=en-us Author : Publish date : 2024-11-27 00:54:00 Copyright for syndicated content belongs to the linked Source .