📊 Trade Shifts
Exploring how regional trade has changed in the past century.
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Trade 🚢
At the turn of the nineteenth century, there were a number of reasons that the Spanish and Portuguese colonies in the Americas sought independence from their Iberian overlords. Trade, or more specifically free trade, was a big one.
See, under the mercantile systems imposed by European empires throughout the 1700s and 1800s colonies could only trade with their colonial masters in the homeland. All raw goods from Spanish America, for example, had to be shipped to the ports of Seville or Cádiz in southern Spain.
Desiring to trade with other great powers (particularly the British), the soon-to-be Latin Americans declared independence. And the rest is history.
Trade has been just as important in the centuries since, if not more, as the newfound states in the region had to grow their economies and finance their development. Trade with Iberia was gradually supplanted by trade with the British and then the United States. Which brings us to today.
China is without a doubt the most critical economy for a majority of Latin America’s biggest countries, serving as the primary trade partner of, among others, Brazil, Chile, Ecuador, Peru, and Uruguay. China’s trade with Latin America has soared from $14B in 2000 to almost $500B in 2022, as our Senior Editor Gabriel Cohen recently outlined in a story for our good friends over at Americas Quarterly.
In the process, China has managed to surpass the European Union in terms of commercial relations with Latin America, swallowing up more Brazilian soy, Chilean copper, and Uruguayan beef than the supranational bloc headquartered in Brussels.
China might even have been able to become the region’s overall largest trade partner, if not for Mexico and its tight trade ties with the US. Last year, Mexico surpassed China to become Washington’s main trade partner. Both imports and exports are soaring between the North American countries, and while South America remains dependent upon China, Mexico’s economy is inextricably tied to its northern neighbor.
Without a doubt, trade is just as important for Latin America’s countries today as it was 200 years ago when they were breaking free from European colonialism. Given the vast natural resources of the region, this seems unlikely to change.
What’s important to always remember, however, is what exactly is being traded. Brazil’s top export to China in 2021 was iron ore; its top import was semiconductors. Argentina exports bovine meat to Germany, yet imports motor vehicles.
Latin America’s countries are no longer the territorial or colonial holdings of far-off monarchs in Lisbon, Madrid, or Paris. If the goal in the long run is to preserve sovereignty and grow economically, then developing domestic industrial and services sectors will be key.
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Comment of the Week 🗣️
Guilherme Carvalho points out the challenges in public transportation as a factor that has probably led to LatAm welcoming hybrid work more than other regions.
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