Mateo Fernandez
Unraveling the Threads of Americas' Geopolitics: Insight, Precision, Vision
Follow on TwitterTariff Wars, Political Tensions, and Economic Pressures: The Americas Face a Volatile Future
The Americas Region is entering a period of heightened geopolitical uncertainty, primarily driven by escalating trade tensions initiated by U.S. President-elect Donald Trump. His pledge to impose 25% tariffs on Mexican and Canadian imports risks triggering a trade war that could disrupt long-standing supply chains, especially in key sectors like agriculture, energy, and automotive production. This has significant implications for U.S.-Mexico-Canada Agreement (USMCA) members, potentially undermining the trilateral trade framework.
Mexico, as the largest U.S. trading partner, stands to bear the brunt of these policies. The country's heavy reliance on exports to the U.S. makes it vulnerable to the proposed tariffs. Mexican President Claudia Sheinbaum's threats of retaliatory tariffs underscore the risks of a tit-for-tat escalation, which could exacerbate inflation and stifle cross-border economic activity. Key industries such as agriculture and automotive, deeply integrated with the U.S. market, may face severe disruptions, affecting jobs and consumer prices on both sides of the border.
Canada, the second-largest trading partner, is similarly at risk. The imposition of tariffs on Canadian uranium and crude oil could inflate U.S. energy costs and harm bilateral energy cooperation, a critical component of North American energy security. Canadian officials are calling for robust negotiations to avert a trade impasse, highlighting the interconnected nature of the two economies.
The broader implications of Trump's trade policies extend to China, with new tariff threats potentially rekindling a trade war. This would have global economic ramifications, including reduced growth forecasts for China and ripple effects on Latin America, where Chinese demand for commodities is a key economic driver.
In Venezuela, the approval of the Simon Bolivar Liberator law intensifies domestic authoritarianism. The law's provisions for long-term political bans and media restrictions signal a tightening grip on dissent. This development, coupled with contested elections and deteriorating economic conditions, threatens internal stability and complicates international engagement with the Maduro regime.
Cuba's economic woes also underscore regional vulnerabilities. The collapse of its sugar industry reflects broader systemic issues exacerbated by U.S. sanctions and internal resource mismanagement. This decline underscores the fragility of Cuba's economy, with potential implications for migration and regional stability.
Short-term risks in the Americas are significantly heightened. The tariff threats pose immediate economic challenges, likely affecting trade flows and financial stability. Over the long term, they may erode trust in U.S. trade commitments and prompt shifts toward alternative markets or trading alliances.
Geopolitical Risk Assessment for the Americas
(29-11-2024)
The geopolitical risk in the Americas Region is elevated due to escalating trade tensions initiated by U.S. President-elect Trump's tariff threats against key partners Mexico, Canada, and China. This has heightened economic and political uncertainties. Additionally, Venezuela's internal tightening laws further complicate regional stability, while the ongoing economic difficulties in Cuba signify broader systemic challenges.
Geopolitical Risk Index
Developments to Follow for the Americas (See All Global)
Direct (29-11-2024)
U.S. Tariff Threats on Mexico, Canada, and ChinaImpacts:
Short-term: 9, Long-term: 7
Assessment: Trump's tariff proposals could destabilize key economic sectors and regional trade frameworks, driving inflation and reducing investment across the Americas.
Direct (29-11-2024)
Venezuela's New Law on Sanctions SupportImpacts:
Short-term: 7, Long-term: 8
Assessment: The tightening political landscape increases internal repression risks and complicates international relations, particularly with Western democracies.
Direct (28-11-2024)
Bolsonaro Coup Allegations in BrazilImpacts:
Short-term: 7, Long-term: 8
Assessment: Risks of political polarization and disruption to governance could undermine Brazil's democratic stability and international reputation.
Direct (28-11-2024)
U.S.-Mexico-Canada Tariff ThreatsImpacts:
Short-term: 8, Long-term: 6
Assessment: Immediate economic impacts, inflationary pressures, and potential retaliatory measures could destabilize trade relations and supply chains across North America.
Indirect (28-11-2024)
Venezuela's Diplomatic and Sanctions IssuesImpacts:
Short-term: 6, Long-term: 7
Assessment: Continued sanctions and regional political shifts could further isolate Venezuela, exacerbating its economic crisis and affecting neighboring countries.
Indirect (28-11-2024)
Potential Fuel Price Increases Due to Canadian TariffsImpacts:
Short-term: 7, Long-term: 6
Assessment: Higher fuel prices from disrupted oil imports could have ripple effects on inflation and consumer spending across the Americas.
Indirect (29-11-2024)
Cuba's Declining Sugar IndustryImpacts:
Short-term: 5, Long-term: 6
Assessment: Cuba's economic struggles highlight systemic inefficiencies and pose risks of increased migration and regional instability.
Direct (28-11-2024)
Small-Scale Mining Protests in PeruImpacts:
Short-term: 6, Long-term: 5
Assessment: Protests highlight governance challenges and the economic risks of unregulated resource extraction, with implications for social stability and investor confidence.
