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The second Trump administration has spent much of its early months focused on Latin America and the Caribbean (LAC). This makes good sense, given cabinet-level officials throughout the administration have deep expertise on LAC<\/a>. Within the region, the administration is keen to control and deter illegal migration, arrest the flow of deadly drugs into the United States, and compete effectively with the People\u2019s Republic of China.<\/p>\n Yet after a mere two months in office, a narrative on the Trump administration\u2019s policy toward LAC and great-power competition has emerged: Regional influence will accrue to China<\/a> at the expense of the United States because Washington appears a \u201cbully<\/a>,\u201d has talked of reviving the controversial Monroe Doctrine<\/a>, and has occasionally adopted the rhetoric of territorial expansion<\/a>. A deputy assistant secretary of state in the Biden administration accused<\/a> the Trump administration of shortsightedness leading to \u201can opening for China, made in America.\u201d Even a former staffer in the first Trump administration worried<\/a> that the current approach to LAC \u201ccould unwittingly facilitate the extension of Beijing\u2019s influence.\u201d Will the Trump administration\u2019s more assertive approach toward LAC benefit China?<\/p>\n<\/p><\/div>\n The second Trump administration has spent much of its early months focused on Latin America and the Caribbean (LAC). This makes good sense, given cabinet-level officials throughout the administration have deep expertise on LAC<\/a>. Within the region, the administration is keen to control and deter illegal migration, arrest the flow of deadly drugs into the United States, and compete effectively with the People\u2019s Republic of China.<\/p>\n Yet after a mere two months in office, a narrative on the Trump administration\u2019s policy toward LAC and great-power competition has emerged: Regional influence will accrue to China<\/a> at the expense of the United States because Washington appears a \u201cbully<\/a>,\u201d has talked of reviving the controversial Monroe Doctrine<\/a>, and has occasionally adopted the rhetoric of territorial expansion<\/a>. A deputy assistant secretary of state in the Biden administration accused<\/a> the Trump administration of shortsightedness leading to \u201can opening for China, made in America.\u201d Even a former staffer in the first Trump administration worried<\/a> that the current approach to LAC \u201ccould unwittingly facilitate the extension of Beijing\u2019s influence.\u201d Will the Trump administration\u2019s more assertive approach toward LAC benefit China?<\/p>\n Predicting China\u2019s burgeoning influence in LAC is best described as the safest bet under any U.S. administration. After all, it has been the baseline for two decades, as China has expanded its influence under every U.S. president since George W. Bush. In 2002, China\u2019s two-way trade stood at $18 billion; by 2022, two-way trade had ballooned to $450 billion. Not only is China the LAC region\u2019s no. 2<\/a> trade partner overall, it is the region\u2019s no. 1 trade partner when not factoring in Mexico\u2014and, to a lesser extent, Central America\u2014the United States\u2019 largest overall trade partner. Beyond two-way trade, China\u2019s approach has grown ever more strategic. Twenty-two countries\u00a0in LAC have acceded<\/a> to China\u2019s Belt and Road Initiative (BRI) since 2018, and China has forged its investment partnerships in sensitive, dual-use areas such as\u00a0space infrastructure<\/a>, deep-water\u00a0port construction<\/a>, and\u00a0telecommunications<\/a>.<\/p>\n However, while China could grow its influence in LAC as a result of the second Trump administration\u2019s policies\u2014and that would be consonant with the trend of the last two decades\u2014there are four principal reasons to cast doubt on this emerging narrative, at least in the short to medium term. These are China\u2019s own limitations, coming changes to U.S. development assistance, the establishment of U.S. red lines, and LAC\u2019s desire to mitigate dependence on China through a strategy of multi-alignment.<\/p>\n First, China\u2019s domestic<\/span> economic and political situation is replete with headwinds that will likely prevent Beijing from acting nimbly and taking advantage of openings to accrue influence in LAC. President Xi Jinping\u2019s drive to centralize key decisions and extend the control of the party-state over more and more of China\u2019s economy, as well as a deep demographic challenge<\/a>, the extent of which few countries have ever weathered successfully, has contributed to flagging economic growth and record low levels<\/a> of foreign direct investment. China\u2019s own debt has risen to unsustainable levels, causing it to reduce the ambitions of its signature BRI, for instance. As a response to these challenges, combined with withering criticism from the West that China saddles global south countries with debt and sows debt traps<\/a>, Beijing has scaled back. After 10 years and nearly $1 trillion<\/a> in loans globally, Xi articulated<\/a> an evolution for the BRI as \u201csmall but beautiful.\u201d Opinions of China in LAC as a reliable and strong partner have declined<\/a> precipitously as many in the region have come to suspect its motives and are cognizant of the downsides to partnership with Beijing. In important yet often underappreciated ways, China has overplayed its hand in LAC.<\/p>\n In recent years, China\u2019s headwinds have contributed to just a trickle<\/a> of loans and financing to LAC. From its apex of lending approximately 10-15 years ago, when one development finance institution alone\u2014China Development Bank\u2014lent over $35 billion in one year to LAC, China\u2019s lending totaled just $2.9 billion between 2019 and 2022. In 2023, all of China\u2019s development finance institutions combined issued<\/a> just over $1 billion to the LAC region.<\/p>\n Second, the Trump administration appears determined to find avenues for greater U.S. influence through the U.S. private sector\u2019s investments. Later this year, the United States must reauthorize<\/a> the U.S. International Development Finance Corporation (DFC), one of its main tools to catalyze private-sector investment in the LAC region. Previously, institutions such as the DFC and the United States Agency for International Development (USAID) were unable to arrest China\u2019s advance in LAC. While it has certainly been disorienting at times, the Trump administration\u2019s desire to restructure U.S. foreign assistance<\/a> and the U.S. Congress\u2019s potential amendments to the DFC in its coming reauthorization could make the organization a more potent force in LAC. Specifically, the DFC\u2019s budget may double<\/a> to $120 billion, while its mandate to reduce poverty may be stricken. This would morph the DFC into an institution whose sole purpose is competition with China in the global south. Doing away with the poverty mandate would also permit the DFC to lend to more countries in the LAC region, where the World Bank\u2019s classification of many countries as \u201cmiddle income\u201d excludes the DFC from potential lending absent national security waivers.<\/p>\n Third, while much has been made about the second Trump administration\u2019s assertive positions in LAC, if done properly, countries in the region could actually benefit from a clearer delineation of U.S. red lines<\/a> regarding China. The United States will remain one of the region\u2019s most important partners, and thus countries often seek to ensure that they can remain in Washington\u2019s good graces as they engage with China in sensitive areas. In past iterations of this balancing act, LAC countries have been left guessing, assuming the United States does not care about a new port<\/a>, Huawei\u2019s telecommunications infrastructure<\/a>, or a space station<\/a>, only to discover later that China\u2019s advance in these areas would contribute to the reduction of U.S. partnership, most often owing to security concerns. Assuming U.S. red lines are limited, articulated well, and messaged appropriately, this exercise could provide a useful moment to structure a deeper relationship with the United States. After all, the natural follow-on from an articulation of U.S. red lines regards the policy toolkit to make alternatives from the United States, its private sector, or its partners elsewhere available.<\/p>\n This follow-on effect<\/a> of U.S. messaging about red lines was visible in Panama recently. Pursuing an assertive approach<\/a> over the Panama Canal, the Trump administration has taken aim at Hong Kong-based Hutchison Port Holdings and its two port concessions at the strategic approaches to the canal, Balboa and Crist\u00f3bal, targeting both as potential security concerns. Sensing the ground shifting beneath its feet<\/a>, Hutchison Port Holdings sold<\/a> a 90 percent stake in the aforementioned ports to a consortium led by U.S. giant BlackRock, including another 41 ports in 22 other countries: 199 total berths in a multibillion-dollar blockbuster deal. With this action, which has had a ripple effect far beyond the Panama Canal<\/a> and planted a U.S. flag in an industry usually dominated by Chinese companies, the Trump administration has also managed to flip the script<\/a> on U.S. private-sector investment in LAC, giving the region a more active role in shaping offers and soliciting companies to invest. Politically, seven national elections<\/a> in the LAC region in 2025, and more in 2026, are likely to bring a rightward shift in the political pendulum less favorable to China and more open to discussions of U.S. red lines\u2014especially if those discussions are connected to private-sector investments and alternatives.<\/p>\n Fourth, the narrative around China\u2019s ineluctable growth in LAC assumes that countries face a binary choice in terms of their potential alignments. In reality, many countries in the region have pursued policies of issue-dependent \u201cmulti-alignment\u201d in recent years. If LAC countries really do seek to balance against a more active Washington that has terminated its policy of \u201cbenign neglect<\/a>,\u201d as the criticism goes, there are options beyond China that are likely more appealing than simply deepening dependence on Beijing\u2014especially if LAC\u2019s greatest concern in pursuing a balancing strategy is a reduction in its autonomy. Given China\u2019s growth in past decades, LAC leaders may even think the pendulum needs to swing back toward the United States and\/or Europe. This means countries may seek closer relations with the European Union, Australia, Israel, South Korea, and Japan\u2014perhaps even Taiwan, especially for those seven countries that still maintain formal diplomatic relations with Taipei. In particular, the European Union and Japan have deepened involvement<\/a> in the LAC region in recent years. From the perspective of advancing the U.S. position in competition with China, the United States should welcome the LAC region fortifying its ties with these like-minded countries.<\/p>\n These are sound<\/span> reasons to doubt that the Trump administration\u2019s policies in LAC are driving the region\u2019s countries into China\u2019s arms in the short or medium term; however, there remain important longer-term risks. Perhaps the biggest long-term risk revolves around the Trump administration\u2019s reexamination and recalibration of global commitments, as well as the drastic reduction of programming<\/a> at USAID. To be sure, while in Central America on his first trip<\/a> as America\u2019s chief diplomat, Secretary of State Marco Rubio cited waivers at each of his stops for important USAID programming to continue. Nevertheless, the abrupt devolution of USAID, as well as statements distancing the United States from global commitments to allies, may undermine LAC countries\u2019 desire to align with the United States long term. If the Trump administration does not leverage its review of foreign aid<\/a> to replace canceled programming with something that\u2014as it promised\u2014aligns with the United States\u2019 foreign-policy goals<\/a>, it may lose the opportunity to keep the United States differentiated from China. Still, LAC governments do not desire replacements for every closed USAID program, and China\u2019s traditional assistance in LAC is not of a kind that would substitute lost USAID money that regional governments do want replaced.<\/p>\n The other long-term risk involves sustaining U.S. economic engagement. While the BlackRock deal is a massive win<\/a> for the Trump administration, the United States should find a way to institutionalize or regularize this kind of approach, lest it be a one-off event. China\u2019s relative silence in the wake of the deal\u2019s announcement has since given way to fulminations<\/a>, suggesting Beijing fears what is at stake. Hutchison Port Holdings was the single largest Chinese company owning and operating ports, and in the words<\/a> of one scholar, \u201cthe transaction will strip out nearly a third of China\u2019s overseas port network and establish a U.S. firm as the controlling interest of a huge and strategic network of foreign port assets.\u201d China\u2019s directive to several of its agencies, including the State Administration for Market Regulation, to examine the deal<\/a> for any security breaches or shortcomings suggests that Beijing is keen to prevent this deal from becoming a replicable model elsewhere in competition with the United States.<\/p>\n Historically, however, the United States has struggled to entice the interest of its private sector in investing in many parts of LAC. The Biden administration\u00a0launched<\/a>\u00a0the Americas Partnership for Economic Prosperity (APEP), a framework meant to engage LAC on economic issues. Despite three years of work, APEP remained underdeveloped<\/a>, only convening its first meeting in November 2023. The Trump administration canceled APEP, replacing it with the America Crece (Americas Grow) program, a revival of the private sector-led investment program launched in the first Trump administration. Much of the administration\u2019s long-term success in LAC may hinge on the success of America Crece or a more institutionalized approach to leveraging the private sector in competition with China. Messaging and establishing red lines are easier than following through on a hopeful vision<\/a> for the region\u2019s economic potential that helps LAC escape the middle-income trap, firm up supply chains, and experience more inclusive growth. Advisors have spoken<\/a> of the necessity of a \u201cgolden age of the Americas\u201d to complement the Trump administration\u2019s focus on domestic reshoring. A sustained approach will be needed to ensure follow-through.<\/p>\n Far from losing ground to China in LAC, if the Trump administration can prevent these long-term risks from materializing and build on the gains of the recent BlackRock deal in the short and medium term, it should be able to realize its vision of competing more effectively with China in the region.<\/p>\n<\/p><\/div>\n
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