Global trade conflicts could have positive and negative effects on Latin America

It remains unclear exactly how the global economy's various trade conflicts, most notably the prolonged dispute between the U.S. and China, will affect Latin America in the long run. According to the Miami Herald, the effects will most likely be a mixed bag, with some immediate gains for the region but also the potential for losses over a more gradual period.

A number of high-revenue corporations with global customer bases have taken the tariffs imposed by the U.S. on the importation of foreign goods - most notably raw materials like steel and aluminum - as a cue to move their operations out of the States and into Latin America. As just two examples, GoPro, a manufacturer of rugged, portable sporting cameras and related accessories, and major paper restaurant goods provider Fuling Global Inc. are both relocating their major factories to Mexico.

Economists presume that these operational shifts and similar moves are attempts to get out of the U.S. before the White House imposes further tariffs on Chinese raw materials. (Various European Union states are also affected by the import duties, just not nearly as much as China.)

On the other hand, a trade war of this kind - the world's two biggest economic powers at each other's figurative throats - isn't good for most of the world, let alone the primary parties concerned, whether the adverse effects are realized slowly or quickly. Alberto Bernal, a chief global strategist with XP Securities, elaborated on this in an interview with the Herald.

"Nobody would be safe from a prolonged trade war," Bernal told the news provider. "It would be ... a huge flood. Some countries would be more flooded than others, but we would all be under water."

The gross domestic product figures for several major Latin American economies are already struggling to various extents. According to Reuters, Brazil's estimate for its 2019 growth fell to 1.24 percent in a central bank survey released May 20. Mexico also saw contraction that brought its first-quarter GDP to 1.26 percent, though Bloomberg noted that its primary industry - agriculture - has a stronger GDP of 2.96 percent. Ultimately, if the U.S.-China trade dispute continues for much longer, the short-term gains afforded by companies moving to Latin America may be partially or totally invalidated by both of the primary parties in the conflict buying fewer goods from Mexico, Brazil, Argentina and other nations in the region.

Global trade conflicts could have positive and negative effects on Latin America