China’s back at it again

Dear all,

We welcome you to the Greater Caribbean Monitor (GCaM).

In this issue, you will find:

• Peru is dangerously close to a Chinese capture

• How China’s soybean tariffs shape U.S. elections

• What We’re Watching

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Best,

The GCaM Team

Despite Trump’s tariff pressure, China continues to expand its footprint in Latin America.

In perspective. Peru has historically been a key U.S. ally in South America. From being one of the first countries in the world to recognize Peru’s independence to signing free trade agreements and cooperation pacts against drug trafficking, the Andean nation and the United States have maintained a close relationship that transcends ideological shifts between left- and right-wing governments.

• Over the course of this century, however, Peru has found alternative partners beyond the Northern Hemisphere—most notably in Asia, and particularly in the People’s Republic of China (PRC).
  
  

• Today, Peru hosts China’s largest embassy in South America—and on the continent overall—with the mega-port of Chancay standing as its most powerful symbol.
  
  

• But relations between the two countries no longer stop at mega infrastructure projects; the PRC has penetrated virtually every aspect of Peru’s economic and political life.

Between the lines. In 2024, roughly 34% of Peru’s exports went to China—compared to just 12–14% to the U.S.—driven largely by the Peruvian mining industry. Chinese products have also become increasingly ubiquitous in Peru: 25% of the country’s automobiles are now Chinese brands. Yet infrastructure projects remain the most visible showcase of China’s dominance.

• The Chancay port, operated by Chinese logistics giant COSCO, is expected to boost Peru’s GDP by up to 2%, while reducing export costs by as much as 20% compared to other Pacific ports in Latin America.
  
  

• The story, however, is more complicated. COSCO secured exclusive operational rights for Chancay from Peru’s port regulator—a concession the regulator was not legally authorized to grant. The Peruvian government subsequently amended the law once the arrangement came to light.
  
  

• Since then, China has used this precedent of submission to push for further concessions, with COSCO lobbying for tax exemptions and a special economic zone while also resisting government oversight.

Hidden in plain sight. Peru’s greatest value to the PRC is as a gateway to deeper regional influence. The Chinese Communist Party (CCP) and its associated companies have expressed interest in building a railway corridor from Chancay to Brazil’s Atlantic coast. The project would cost an estimated USD 10B for the Peruvian government, allocating the burden on public finances while concentrating most of the economic benefits in COSCO as port operator and in Chinese companies gaining direct access to Brazil’s market.

• President Dina Boluarte’s government faces intense pressure from the PRC via COSCO to advance a project of little value to Peru—effectively as payback for Beijing’s “selfless” investment in building Chancay.
  
  

• China has also expressed interest in building highways and other rail projects across the country.
  
  

• But the CCP seeks to coerce the Peruvian government into pursuing these investments—valued at up to USD 15B—through bilateral state-to-state deals, bypassing transparent bidding processes and competitive market conditions.

The key. To secure such massive investments, China is working to infiltrate Peru’s academic, political, and media institutions. The PRC has launched scholarship programs through companies like Huawei and Confucius Institutes at the Pontifical Catholic University of Peru and other universities. These scholarships aim to redirect the country’s brightest talent into training programs under CCP supervision.

• China is also working to shape public opinion by signing agreements with media outlets, offering all-expenses-paid trips to China in exchange for content-sharing deals with the PRC.
  
  

• Chinese companies such as Huawei also play a direct role in cultivating ties with Peruvian politicians, sponsoring trips to China and Europe—such as the recent trip for a group of lawmakers to a telecommunications conference in Spain.
  
  

• Through Peru, China has found its most effective way to erode U.S. hegemony in the region—essentially capturing the state and economic infrastructure of a country historically close and strategically valuable to Washington.

China’s tariffs on U.S. soybeans are exerting pressure far beyond commodity markets.

In perspective. The commercial decision strikes directly at the Midwest and the Plains, where the crop is heavily concentrated. Tariffs on this critical agro-industrial product will trigger income shocks for producers and workers, ultimately prompting a policy response aimed at shielding small and medium-sized businesses from financial collapse. The soybean belt runs through the Midwest with some presence in the Plains, with significant price differences compared to competitors.

• On April 10, 2025, China imposed an additional 84% retaliatory tariff on all U.S. goods (including soybeans), covering Most Favored Nation treatment and Value-Added Tax.

  
  

• The U.S. is a major soybean producer, accounting for roughly 30% of total global exports. China purchased American soybeans because they offered a lower landed cost—a favorable price spread compared to Brazil at the time.

  
  

• China has since shifted purchases largely to Brazil (and, at the margin, Argentina and Uruguay), reducing U.S. soybean sales to China to nearly zero.

Why it matters. Many of the biggest soybean-producing states are Republican strongholds, making China’s tariff choice a deeper political move than it appears.

• Trump’s tariff war has imposed harsh conditions on multiple industries across the country amid severe political polarization and unrest. Export disruptions (or compensating aid) tied to tariffs have had outsized salience in Republican states, with some spillover into Democratic constituencies in the Midwest.

  
  

• Of the 15 major soybean states, 13 voted for Trump. Two of them—Michigan and Wisconsin—did so by very narrow margins, while the others were clear victories.

  
  

• By timing and targeting U.S. soybean-dependent counties, Beijing’s tariffs serve as a calculated attempt to depress rural incomes and, by extension, manipulate Republican turnout in the 2026 midterms.

Between the lines. China is tightening pressure on key Republican states during a critical governance period. The tariff functions both as an economic lever and as a political signal, penalizing the U.S. while testing voters’ tolerance for higher input and consumer costs at home.

• The burden of the decision falls disproportionately on farm- and logistics-oriented counties, effectively converting crush margins and export bookings into electoral variables at the district level.

  
  

• Ultimately, the effect is a calibrated pressure campaign to erode rural cash flows ahead of the 2026 midterms—nudging turnout and extracting policy concessions without firing a shot.

In conclusion. Washington will likely pursue a dual-track strategy. In the short term, it will provide income support for farmers through payments or credit refinancing. At the same time, it will seek to re-route demand by deepening sales to Mexico and the EU, reducing dependence on a single buyer.

• Nonetheless, if tariff pressure persists, the soybean industry is likely to generate negative political effects for Republicans in the 2026 midterm elections.

What We’re Watching 🔎 . . .

Draft Bill Would Authorize Trump to Kill People He Deems Narco-Terrorists [link]

Charlie Savage and Robert Jimison, The New York Times

Draft legislation circulating in Washington would grant President Trump sweeping authority to wage war on Latin American drug cartels—and even on governments accused of aiding them. The proposal follows two U.S. military strikes this month against suspected smuggling boats in the Caribbean, which killed 14 people and sparked sharp debate over the president’s unilateral use of force.

The draft authorization, reportedly involving Rep. Cory Mills (R-FL), echoes the broad 2001 AUMF against al-Qaeda but would sunset after five years. Critics warn it amounts to a “blank check” for open-ended conflict, while Democrats Adam Schiff and Tim Kaine have introduced a resolution to reassert congressional oversight.

The push underscores the administration’s escalating pressure on Venezuela’s Nicolás Maduro, accused by Trump of directing cartel activity. If advanced, the bill could trigger one of the fiercest debates over war powers since 9/11.

Tensiones rise in Caribbean as U.S., Venezuela conduct parallel military exercises [link]

Antonio María Delgado, Miami Herald

Tensions between Washington and Caracas intensified this week as both nations staged military maneuvers in the Caribbean, fueling concerns of a potential armed clash. President Donald Trump announced that U.S. forces had sunk three Venezuelan boats allegedly smuggling drugs, killing at least 14 people. Soon after, U.S. Southern Command released footage of Marines conducting amphibious drills off Puerto Rico. Hours earlier, Venezuela had launched its own maneuvers on La Orchila Island, deploying warships, drones, and Russian-made artillery in a show of readiness against what it called U.S. invasion threats.

The U.S. deployment—eight warships, F-35 jets, and 4,500 troops—marks the largest regional show of force in decades, targeting the “Cartel de los Soles”, which Washington claims is run by Nicolás Maduro and his ally Diosdado Cabello. The administration has offered record rewards of USD 50M for Maduro and USD 25M for Cabello.

Caracas, meanwhile, denounced the U.S. strikes as pretexts for intervention, disputing evidence of narcotics onboard the destroyed vessels. Defense Minister Vladimir Padrino López vowed to strengthen defenses, announcing 284 “battle fronts” and 25 000 troops mobilized nationwide.