HONG KONG (AP) — China has significantly increased its low-priced exports to Latin America, particularly in the automotive and e-commerce sectors, as Chinese exporters adapt to U.S. tariffs and a changing geopolitical landscape under President Donald Trump. This strategy has made China a key trading partner for several Latin American countries, which offer rich natural resources and expanding markets that China aims to tap into, especially given Trump's characterization of the region as "America's Backyard."

The world's second-largest economy is facing a drop in domestic demand and is seeking new markets for its products. In 2024, Chinese exports to Latin America, a region boasting over 600 million residents, surged while exports to the U.S. fell by 20% the previous year. Margaret Myers, director of the Asia and Latin America program at the Inter-American Dialogue, points out that the robust middle class and high purchasing power in Latin America make it an ideal location for China to offload excess industrial production.

Although cheap Chinese goods are generally welcomed by consumers in Latin America, they pose challenges for local businesses striving to build competitive industries. Countries like Mexico, Chile, and Brazil have responded by raising tariffs or implementing other protective measures to safeguard their local markets from an influx of Chinese products, including cars, clothing, and electronics.

Particularly notable is the rise of Chinese e-commerce platforms such as Temu and Shein, which have gained immense popularity in the region. Temu, for instance, averaged 114 million monthly active users in Latin America during the first half of 2025, showing a remarkable increase of 165% from the previous year. Consumers like Chilean restaurant manager Lady Mogollon express a preference for these platforms due to the lower prices, which are often much cheaper than similar items in brick-and-mortar stores.

This trend is not limited to online shopping; many streets in cities like Mexico City are filled with stalls selling a variety of Chinese-made products. Ángel Ramírez, a manager of a lamp shop in downtown Mexico City, has reported a troubling increase in competition from these imports, noting that the number of shops selling Chinese goods has tripled, putting long-established Mexican businesses at risk of closure.

Argentina has been particularly affected by rising Chinese imports, contributing to the shutdown of local factories and layoffs in a manufacturing sector that employs approximately 20% of its workforce. In October 2025, Argentine e-commerce imports, primarily from China, rose by 237% year-on-year. Luciano Galfione, president of the Pro Tejer Foundation, expressed concern over the impact of imports on local industry, pointing out that they are operating at historically low capacities.

Chinese automotive brands are making significant strides in both Brazil and Mexico, the region's main auto manufacturing hubs. For example, over 80% of electric vehicles (EVs) sold in Brazil for 2024 were of Chinese brand. Mexico has continuously been a major destination for Chinese auto imports, surpassing Russia in the volume of vehicles brought in.

While China relies on Latin America for its vast natural resources, the trade balance is becoming increasingly skewed. Mexico's trade deficit with China reached $120 billion in 2024, with exports amounting to only about $9 billion. Argentina's deficit rose to approximately $8.2 billion. In contrast, Brazil achieved a surplus of about $29 billion, driven largely by exports of soybeans, while Chile benefits from its exports of copper and lithium.

Furthermore, between 2014 and 2023, China provided approximately $153 billion in loans and grants to Latin American and Caribbean countries, significantly outperforming the $50.7 billion offered by the U.S. This substantial financial backing bolsters China's influence in the region, with infrastructure projects such as a $1.3 billion megaport in Peru designed to connect with Brazil’s Atlantic coast.

Despite the deepening economic ties with China, many Latin American countries are hesitant to completely disregard the competitive pressure from Chinese imports. Mexico has imposed tariffs as high as 50% on various Chinese goods, while Brazil attempts to phase out import tax exemptions to tackle cheap imports. This protective stance is not uniform, as nations must navigate the complexities of their economic relationship with China to avoid potential retaliation.

As Latin America grapples with the implications of China's exports, the regional dynamics between trade policy, local industry protection, and the need for affordable goods create a challenging but crucial balancing act.