What Opportunities Will The U.S.-China Trade War Create?

The Trump administration’s objective of reducing America's trade deficit with China aims to rebalance global commerce entirely. 

Trump envisions a world where America is back on top of global trade - but for that, manufacturing and productive power must return to the United States.

It’s hard to say if that’s going to happen. It will require breaking U.S. dependence on cheap Chinese goods and the total reorientation of global supply chains. 

What is for certain is that the situation escalated quickly. With 140% tariffs still in effect, Trump made an executive decision, and he’s leaving it to the market to figure out how to deal with it. 

But the market, as it always does, will figure out how to deal with it. Supply chains are nothing if not adaptive. After Covid, businesses have become adept at dealing with these types of abrupt disruptions.

So what will the world look like once the economy is restructured away from China?

Changing Trade Flows

With the dramatic changes to global trade flows, Latin America’s economies find themselves uniquely positioned. The region’s  geographical proximity alone makes the United States a natural strategic ally in terms of trade and defence.

But in recent years, China has made a major push to build closer economic ties with countries in the LATAM region. Critical sectors like agriculture, energy, and raw materials—where Latin America is a global powerhouse—are experiencing a surge in demand from China as trade routes continue to diversify. 

As a matter of fact, since 2000, Chinese trade with Latin America has skyrocketed from $12 billion to more than $500 billion by 2025, making China the largest trading partner of South America as a whole. With its access to the U.S. market denied, China will likely look to South America to provide many of its imports, especially in the agricultural sector.

However, as China strengthens its ties with Latin America, the U.S. is also aware of the growing influence in its own backyard. The U.S. has strategically kept tariffs on Latin American goods relatively low. This positioning sets the stage for Latin America to become an even more integral part of the global supply chain, particularly as the U.S. seeks to de-risk its own supply chains.

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With Trump’s move away from China, LATAM countries are poised to fill the gap. But who will benefit, and how?

Nearshoring and Export Opportunities

As supply chains become more fragile and the costs of doing business with Asia & Europe increase, companies will naturally seek alternatives closer to home.

For the United States, only Latin America offers the ideal combination of competitive labor costs, geographic proximity, and hemispheric security. Colombia, for example, stands out as South America’s only Major Non-NATO Ally, offering not just proximity but also political and security stability.

Countries like Mexico and Colombia are especially well-positioned to benefit. Mexico, already integrated into North American supply chains through the USMCA, is seeing an influx of new manufacturing and logistics investments. Meanwhile, Colombia is building momentum by offering favorable business environments and free trade agreements.

Another important factor shaping the nearshoring conversation, particularly in agriculture, is the rising trend of deportations. In recent months, the U.S. has ramped up the deportation of undocumented migrants, many of whom are involved in the agricultural sector. As the domestic workforce shrinks and labor shortages intensify, U.S. farms are grappling with higher production costs.

This growing pressure is pushing companies to look southward, where Latin American countries offer a more stable and scalable labor supply to meet the sector’s demands. Yet nearshoring alone may not be enough to fully achieve the U.S.'s reshoring ambitions. If the goal is to bring manufacturing back home and boost American exports, broader policy changes will be needed, particularly around currency.

Dollar Devaluation

A strong U.S. dollar might be great for consumers, but it makes American goods a lot less competitive abroad. With retaliatory tariffs in play and global trade patterns shifting, the only major tool left to boost U.S. exports in the medium term is currency policy. Put simply, weakening the dollar could become a key piece of any serious reshoring strategy.

A cheaper dollar would make U.S. products more affordable for buyers overseas, giving domestic manufacturing a much-needed boost. But this move wouldn’t just affect the U.S., it would send ripple effects across the globe. Latin American economies, many of which depend heavily on trade with the U.S., would feel the impact right away.

For investors, this shift could open up a big opportunity: as the dollar weakens, Latin American currencies could strengthen. In that kind of environment, assets denominated in foreign currencies, especially from countries set to benefit from the new trade flows, like Mexico, Colombia, and Brazil, could see strong gains.

In fact, since the beginning of the year, the dollar has already depreciated by 4.75% against the Colombian peso and 6.05% against the Mexican peso. Given the current environment, this trend could very well accelerate even further in the coming years.

The declining value of the dollar favors investment portfolios with broader international exposure, especially in countries that are major commodity producers. As the dollar continues to weaken against other currencies, one thing is becoming clear: assets tied to commodities in foreign markets—particularly in Latin America—are well positioned to come out ahead.

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