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Latin America: The New Stage of U.S.-China Rivalry
The renewed activism of the United States in its own “backyard” is now facing a deeply rooted Chinese presence. Latin American countries are navigating fragile terrain, caught between mounting strategic pressures and economic constraints that are hard to escape.
The second Trump administration brought Latin America back into the spotlight, marking a shift after more than two decades of Washington’s extra-hemispheric focus, often pursued at the expense of engagement in its own neighbourhood. Notably, the first foreign trip by Secretary of State Marco Rubio, which included Panama, El Salvador, Guatemala, Costa Rica, and the Dominican Republic, was a clear signal of the region’s renewed strategic importance.
However, this renewed activism, inspired by the “Americas First” principle, has taken shape within a strongly securitized framework. It has included a selective pullback from traditional areas of U.S. foreign engagement, protectionist policies, particularly new tariffs, and a focus on domestic concerns. Key measures included tougher rhetoric on the fentanyl crisis, heightened efforts to combat transnational organized crime, stricter immigration policies, and significant cuts to humanitarian aid and development cooperation. At the core of this strategy lies a central objective: to contain China’s growing influence in the region.
Given China’s predominantly economic presence in Latin America, the Trump administration’s priorities have reflected not so much fears of an imminent military threat, but rather concerns about Beijing’s ability to exert influence through its economic clout. In a context of geopolitical tension or crisis, countries heavily reliant on Chinese trade, investment, or credit may find themselves unable to resist pressure from Beijing, even at the expense of protecting Washington’s strategic interests.
The administration focused its attention on two main areas: China’s role in critical mineral supply chains and its control of dual-use strategic infrastructure, especially digital and port infrastructure. Among the port facilities drawing particular U.S. attention is the Panama Canal. Under the pressure of President Trump, the Panamanian government withdrew from the Belt and Road Initiative (BRI) and Hong Kong-based CK Hutchison—managing the Balboa and Cristóbal terminals for over 20 years—sold those assets to a consortium led by BlackRock and Terminal Investment Limited (a subsidiary of MSC). While Trump’s direct and often polarizing rhetoric has led some observers to downplay concerns about China’s port presence in Panama, the U.S. Southern Command (SOUTHCOM) has long worried that such a critical infrastructure assetv could be used by China for surveillance or to hinder a U.S. military response—particularly in a potential Taiwan-related crisis.
Although the Trump administration’s approach echoed longstanding strategic traditions in U.S. foreign policy, it has been criticized for lacking a cohesive and structured vision. A focus on high-profile interventions and politically sensitive issues risks fragmenting U.S. engagement in the region into a series of ad hoc responses—perhaps effective in the short term, but lacking an overarching strategy. In a context where China’s economic footprint is significant, especially in infrastructure, energy, and technology, targeting individual projects or symbolic investments is unlikely to yield long-term results.
China’s primary instrument of influence in Latin America continues to be its economic presence, which is steadily reshaping the regional balance in its favor. Countering this trend requires more than traditional security cooperation; it calls for a consistent, multidimensional strategy addressing economic development, institutional capacity building, and political alignment. With this in mind, the U.S. Congress passed the Western Hemisphere Partnership Act, tasking the State Department with drafting a mid-term regional strategy by the end of June. Whether this initiative becomes a lasting strategic framework or just another isolated measure remains to be seen.
China’s Pivot Creates Strategic Space for the U.S.
China has capitalized on the Trump administration’s inconsistent approach—characterized by unpredictability and a mix of selective disengagement and assertive posturing—to reassert its presence in Latin America, positioning itself as a reliable partner and advocate of multilateralism. During the China-CELAC Forum held in mid-May, President Xi Jinping announced new infrastructure investments and a $9 billion (yuan-denominated) credit line for regional countries.
This renewed momentum signals not only Beijing’s ambition to consolidate its geopolitical reach, but also reflects a deeper structural shift in its growth model. As China faces slowing traditional growth engines and the risk of falling into the so-called “middle-income trap,” the Communist Party has steered the country away from its export-driven model toward high-value, technology-intensive sectors. Latin America, where demand for such products is rising, has gained strategic relevance in Beijing’s plans, especially given escalating trade tensions with the U.S. and the rise of protectionist barriers that increasingly complicate access to the North American market.
As China’s economic footprint in the region expands, Latin American governments are becoming more aware of the structural imbalances in their trade relations with Beijing. The main concerns include unfair competition from Chinese firms in sectors where local industries aspire to grow, and overreliance on exports of agricultural and mineral commodities. Indeed, China’s trade model reinforces these imbalances: 84% of Latin American exports to China are raw materials, while 63.4% of Chinese exports to the region are industrial goods.
During a recent state visit to China—despite the cordial tone—Brazilian President Lula expressed growing regional frustration over these asymmetries, calling for increased exports of higher value-added goods. Tensions, however, go beyond trade. A recent decline in Belt and Road investments has undercut a key pillar of China’s previously positive narrative in Latin America. Coupled with Beijing’s growing focus on high-tech and innovation sectors, this decline has triggered new concerns in several Latin American countries, which now worry about dependence in areas considered strategic or sensitive. The growing skepticism toward China’s role opens a political window that the United States could leverage to reassert itself as a more dependable and regionally responsive partner.
Caught Between Giants: Latin America’s Dilemma
As U.S.-China rivalry intensifies, Latin American governments are forced to navigate between escalating pressures and shrinking room for maneuver. The U.S. tends to frame its competition with China in binary terms, asking countries in the region to take sides—especially in sectors deemed strategic. In critical areas like information and communication technologies, including 5G, or major infrastructure projects such as China’s Chancay megaport in Peru, Washington is pressing governments to reject Chinese involvement—without offering viable alternatives. This is compounded by a selective U.S. disinterest in domains traditionally associated with its soft power—such as humanitarian aid and development assistance—while simultaneously criticizing any signs of Latin American openness to China. Meanwhile, China’s economic presence has grown so entrenched that even governments wishing to distance themselves from Beijing often find themselves backtracking.
Argentina under President Javier Milei offers a revealing example. Despite his militant anti-China rhetoric and alignment with Washington, rewarded in April with a $20 billion loan from the IMF, the Argentine government was forced to revisit several policy positions. Pressed by the need to bolster foreign reserves, Buenos Aires maintained a controversial currency swap agreement with China and, while symbolically distancing itself from multilateral organizations like the WHO, opened the door to new Chinese investments in the strategic lithium sector. Argentina’s trajectory highlights a broader reality: in a regional economy increasingly intertwined with China’s, the policy autonomy of Latin American states is shrinking—even for those with strong pro-Western leanings.
As U.S.-China competition sharpens, the stakes are rising and Latin American governments are left with less margin for manoeuvre. Washington remains the dominant player in the defense and security realms, but its reliability is increasingly questioned across the region. Economically, China’s footprint, especially in South America, has reached such depth that many countries struggle to push back against its priorities. At the same time, Beijing’s renewed engagement is being met with growing caution. This creates an opening for the U.S. to reclaim relevance, if it can put forward a consistent, multidimensional agenda. Stability and continuity have long been perceived as strengths of China’s approach; it is now up to Washington to prove it can offer a competitive alternative. The Western Hemisphere Partnership Act may be a step in the right direction, but much will depend on how effectively it is implemented.
