Despite the US imposing tariffs on numerous countries in the area, the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) forecast in a report released on Wednesday that commerce between all Latin American and Caribbean countries will increase in 2025.
Although it was expected that the measures would have a more severe effect on regional trade flows, they have so far had a less severe effect.
According to the report, the total value of regional exports will increase by 5 per cent next year compared to 4.5 per cent for 2024.
This growth is based on 4% increase in the volumes of exports and 1% increase in prices. Mexico, the biggest exporter in the region, is also expected to see shipments increase 5% in 2025.
The mild effects of the US tariffs, according to ECLAC, are partly attributable to the fact that US businesses anticipated their implementation and were already importing and building up stockpiles of many of the commodities implicated before they were implemented.
When taken as a whole, these tendencies counteract the dampening effect of tariff increases.
Short-term strength, longer-term uncertainty
ECLAC warned in its report that although the short-term trajectory looks promising, the outlook after 2025 is more uncertain.
The agency warned that expectations for global goods trade in 2026 are less hopeful, foreshadowing the risk of slower growth ahead.
Service exports from Latin America and the Caribbean are predicted to expand by 8% next year, albeit this indicates a slight reduction from the previous year’s pace.
In spite of tariff pressure, the region’s overall trade in products and services increased at yearly rates of 4% for exports and 7% for imports during the first half of 2025.
Commodity prices edge higher
Gains in exports have also been somewhat influenced by commodity prices. Prices for the region’s main export goods increased by 1.7% between January and August of 2025.
This indicates a more favourable price situation this year, in contrast to the 2.1% decrease noted over the same period in 2024.
Strong momentum in the first half of 2025, influenced in part by preemptive inventory buildup ahead of new US trade measures, is reflected in the upward revision to trade predictions, according to ECLAC.
Despite rising tariff rates, these factors continued to support demand.
Tariff exposure below the global average
The region now has an average effective US tariff of around 10 per cent, seven percentage points below the world average.
That relatively limited exposure has provided some cushioning from the blow to exports, and aided in a stronger-than-expected trade performance.
ECLAC, however, warned that this could come to an end. Future tariff levels may change based on trade surpluses and a range of non-economic influenced variables.
Amid this uncertainty, the report called for wider diversification of trade and for countries to boost intra-regional integration as a resilience measure to external shocks in policy direction.
Call for strategic adjustment
According to the report, it is up to Latin America and the Caribbean to adjust to a changing global trade scene.
As US tariffs may shift, while the external demand becomes more challenging, regional policymakers are under pressure to consolidate structural competitiveness.
ECLAC reported that diversification and deeper regional cooperation could help reduce exposure to unilateral trade measures and increase stability.
Continued emphasis on increasing market access and verticalizing regional supply chains will be critical to maintaining the momentum of growth beyond the short-term projection period, the report advised.
Heading into 2025, trade in the region looks better than most analysts believe it would be.
Still, whether the concern regarding trade policy improves or deteriorates, it remains clear that careful planning is necessary to make good cycles last.
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