The Western Hemisphere’s Moment of Reckoning

Dear all,

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

In this issue, you will find:

• U.S. Tariffs on Latin America

• China Reasserts Its Hold on the Panama Canal

• Taiwan’s Uphill Struggle in Central America

As always, please feel free to share GCaM with your friends and colleagues.

If you’ve been forwarded this newsletter, you may click here to subscribe.

Best,

The GCaM Team

This week, Trump announced new and expanded tariffs targeting all U.S. trading partners.

• For the most part, Latin American countries were hit with a baseline 10% tariff on all exports — with a few notable exceptions, including Nicaragua (18%), Venezuela (15%), and Guyana, which was by far the most heavily impacted, facing a blanket tariff of 38%.

• The most notable case, however, is Mexico, which was excluded from the “reciprocal” tariffs announcement but has nonetheless been affected by a range of duties — including a 25% tariff on all non-compliant USMCA goods, as well as existing 25% tariffs on autos, auto parts, steel, and aluminum.

• In general, Latin American exports are commodity-driven, with a dual emphasis on agro-based and mineral-based products. Textiles are also an important but regionally concentrated sector — prominent in Central America, yet less significant across the broader region.

Why It Matters. Many countries in the zone — particularly those closer to the U.S. — send more than a third of their exports to the United States. Mexico, once again, stands out, with approximately 80% of its exports destined for the U.S. market.

• While tariffs are expected to reduce export demand and raise production and living costs due to value chain disruptions—mostly linked to the new 54% tariff on nearly all Chinese goods—the outlook for Latin America might not be as dire as it seems.

• Trump’s tariff salvo hit Southeast Asian countries—whose commodity-driven exports compete with those from Latin America—particularly hard, with rates exceeding 30% in cases like Indonesia and Thailand, and nearing 50% for countries like Vietnam and Cambodia.

• This could give Latin America a competitive edge not only in manufacturing, but also in its textile, agro-, and mineral-based exports

What’s Next. There’s still a lot of uncertainty surrounding the situation, particularly over how the Trump administration determined the basis for the so-called “reciprocal tariffs.”

• This has reinforced the notion that Washington’s tariffs are not grounded in economic principles or commercial reciprocity but are instead being used as leverage to further its political agenda — including the war on drugs and efforts to curb illegal immigration.

• The confusion remains palpable, with the Secretary of Commerce and White House staff insisting that the tariffs will not be scaled back and are not intended as a negotiating tool. Just hours later, however, Trump contradicted them, stating that “tariffs give us great power to negotiate. They always have.”

• While Trump invoked emergency powers under the International Emergency Economic Powers Act to impose the new tariffs, whether preferential trade agreements—such as CAFTA–DR—or reduced non-tariff barriers will eventually stand in their way remains uncertain. One thing is clear: the global trade order has shifted.

As the trade war unfolds, China shores up its influence over the Panama Canal.

Why It Matters. China’s growing influence over the Panama Canal is one of Trump’s top concerns. Hong Kong-based CK Hutchison owns two ports—Balboa and Cristóbal—located at either end of the canal.

• While both ports are privately owned, Beijing has repeatedly demonstrated its ability to exert influence over business operations involving Chinese interests or investment.

• Of particular importance is the company's headquarters in Hong Kong, which maintains its own currency, legal and economic systems, and a regulatory framework autonomous from China—part of the “one country, two systems” policy.

•  Beijing’s intervention accelerated the erosion of Hong Kong’s autonomy, a process that began after the 2019 protests and culminated in the 2020 National Security Law, which increased China’s control over the city.

In Perspective. Following an “antitrust review,” China’s State Administration for Market Regulation (SAMR) blocked the sale of two CK Hutchison-owned ports in the Panama Canal to a consortium led by BlackRock.

• According to the agency, the deal was halted to protect fair competition and safeguard the public interest.

• The Panamanian ports were part of a $22.8 billion transaction that included the sale of 43 ports worldwide.

• However, SAMR’s decision appears less about antitrust concerns and more about preventing the acquisition of strategic assets by a U.S. company.

The Other Side. Xi Jinping is particularly wary of surrendering influence to BlackRock, the world’s largest asset manager, which maintains close ties to the U.S. government.

• The firm has gradually scaled back its dealings with China in line with Washington’s directives to restrict investments deemed sensitive to national security.

The Bottom Line. For Beijing, maintaining regional influence is a top priority. For Xi Jinping, retaining control over the canal’s ports is especially critical as Trump’s trade war formally kicked off this week.

• SAMR’s decision gives China a bargaining chip in the face of the new U.S. tariff policy—one that Trump had hoped to secure through the acquisition.

• China remains one of the few countries that has not sought to de-escalate trade tensions with the U.S.

• Beijing’s posture continues to favor a head-on confrontation, avoiding any appearance of weakness in response to Trump 2.0’s aggressive trade agenda.

  Share this content:

What We’re Watching 🔎 . . .

SunnyD: Bright-Orange Beverage Brand Fetches Over $1 Billion [link]

Jesse Newman y Laura Cooper, The Wall Street Journal

Guatemalan conglomerate Castillo Hermanos—known for its presence in the food, beverage, and real estate sectors across Central America—has acquired the iconic SunnyD brand and other beverages from Harvest Hill Beverage Co. in a deal valued at approximately USD 1.4 billion.

The move aims to strengthen SunnyD’s presence, a beverage popular among Hispanic consumers in the U.S. and known for its affordability. While the brand has lost relevance in recent years due to its artificial ingredients, it now plans to adapt to changing market demands by incorporating more natural components. The deal also includes the integration of six manufacturing plants in the U.S. and 1,000 employees.

China’s retaliation against Trump’s tariffs is an act of self-harm [link]

The Economist

China has imposed an additional 34% tariff on all U.S. imports in response to Trump’s escalating trade measures. The move primarily impacts agricultural products—especially soybeans—and is accelerating a shift toward alternative suppliers like Brazil, which is benefiting from a record harvest.

At the same time, Beijing suspended import approvals for sorghum and poultry products from U.S. companies, further intensifying trade tensions.

However, the decision could also prove self-destructive for China, as its economy is feeling the strain from rising supply chain costs and its dependence on the U.S. as one of its main trading partners—for both exports and imports.

Taiwan’s presence in the Central American Integration System (SICA, for its Spanish acronym) is at risk — but key regional allies are holding the line.

In Perspective. Taiwan’s future in Central America hinges on two countries: Guatemala and Belize. Guatemala, the larger of the two, remains loyal to Taipei largely due to U.S. influence; while Belize, its most faithful ally, carries little weight in international affairs.

• Nevertheless, Taiwan continues to hold its status as an observer partner in SICA.

• Nicaragua, however, has taken it upon itself to sideline Taiwan and erase its presence from it.

• The Ortega-Murillo regime is seeking to replace Taiwan’s observer status with that of China and Russia.

How It Works. The SICA General Secretariat rotates among member states. Under that framework, the post belongs to Nicaragua for the 2021–2025 term.

• The secretariat has remained vacant since 2023, when Nicaraguan Werner Vargas resigned, officially for personal reasons, though speculation points to pressure from Ortega himself.

• Since then, Nicaragua has failed to replace Vargas, with every proposed candidate for secretary general being rejected by the rest of Central America.

• The regime’s most recent nominee, Denis Moncada Colindres, was rejected — for the second time — by Guatemala, Costa Rica, Panama, and the Dominican Republic, further straining relations between Managua and the rest of the region.

Between The Lines. The region has closed ranks to block Nicaragua’s efforts to admit Russia and China as observers, preserving Taiwan’s presence, even though Costa Rica, Panama, and the Dominican Republic severed diplomatic ties with Taiwan between 2017 and 2018.

• Additionally, the re-election of Prime Minister John Briceño in Belize ensures Taiwan a reliable ally within SICA for at least another five years.

• Nicaragua has only a few months left to appoint a secretary general—an unlikely outcome, as most of Central America, except for Xiomara Castro in Honduras, has effectively formed an "anti-Ortega" cordon sanitaire.

• For now, the secretariat is being managed operationally by Salvadoran Ingrid Figueroa, SICA’s executive director.

What Now. The fact that Taiwan’s main diplomatic battle in the Western Hemisphere is to remain an observer in SICA underscores Taipei’s weakening position. The strategy is structurally fragile. Taiwan’s sovereign security does not hinge on Central America.

• Whether China invades the island has little to do with recognition from small, globally marginal countries.

• To secure its sovereignty, Taiwan must start courting hemispheric giants—such as Mexico and Brazil—through trade relationships that undercut their diplomatic alignment with China.

• Once a country aligns with China, it’s difficult to break away. However, exposing the Chinese Communist Party’s reaction to a potential opening with Taiwan could fracture loyalties—just as occurred with the European Union, following China’s aggressive response to Lithuania opening a Taiwanese diplomatic office.