According to ECLAC’s latest annual report on international trade, the region’s countries face, on average, lower tariffs in the United States than several of that country’s main trading partners, which opens up some opportunities for expanding their market share.

Given the shift in United States trade policy this year, governments in the region should diversify their trade relations and strengthen regional integration, according to the latest annual report by the Economic Commission for Latin America and the Caribbean (ECLAC) on the region’s trade performance, which was presented today. 

In the report entitled International Trade Outlook for Latin America and the Caribbean 2025: International trade in a new era of weaponized interdependence – unveiled at a press conference by the United Nations regional organization’s Executive Secretary, José Manuel Salazar-Xirinachs – ECLAC recommends that countries avoid adopting measures that could increase uncertainty in a context marked by major disruptions and geopolitical tensions in world trade.

In its three chapters, the document details the recent evolution of the region’s trade along with projections, analyzing in particular the impact that the new United States trade policy has had on the region’s countries. It also analyzes the challenge of increasing the technology intensity and advanced human capital intensity of goods and services exports from Latin America and the Caribbean.

According to the document, as a result of the various tariff hikes implemented by the United States since February 2025, Latin American and Caribbean countries face, on average, an effective tariff rate of around 10% in that country, which is 7 percentage points lower than the average imposed globally. The highest average tariff is faced by Brazil (33%), followed by Uruguay (20%) and Nicaragua (18%). Mexico is subject to an average effective tariff of 8%, since the majority of its exports enter tariff-free, either because they benefit from the Agreement between the United States of America, the United Mexican States and Canada (USMCA) or because they are exempted from the hikes.

Overall, the countries of Latin America and the Caribbean face lower tariffs in the United States than several of that country’s main trading partners, particularly from Asia. This situation creates opportunities for trade diversion in favor of the region’s exports, in sectors such as clothing, medical devices and agro-industry, ECLAC indicates.

Meanwhile, there is evidence that the uncertainty generated by the changes in U.S. trade policy is affecting Foreign Direct Investment (FDI) flows to the region, especially in sectors that account for a large share of exports to that market, the report states. In the first half of 2025, FDI project announcements in the region totaled $31.374 billion dollars, down 53% from the same period in 2024 and 37% lower than the 2015-2024 average.

To address this situation, ECLAC recommends that the region’s countries deepen their trade relations with partners such as China, the European Union, India, the Association of Southeast Asian Nations (ASEAN), the Cooperation Council for the Arab States of the Gulf, and the African Continental Free Trade Area. In addition, it recommends strengthening regional integration in areas such as infrastructure, trade facilitation and regulatory convergence. 

Regional trade performance in 2025

The International Trade Outlook for Latin America and the Caribbean 2025 report indicates that the value of regional goods exports from Latin America and the Caribbean will grow by 5% in 2025, similar to the increase seen in 2024 (4.5%). This projected expansion is attributed to a 4% increase in the volume exported and a 1% increase in prices.

Meanwhile, the region’s imports are seen rising by 6%, as a result of a 7% increase in volume and a 1% decline in prices.

Among the region’s main trading partners, China is expected to account for the biggest export increase by value in 2025, with regional shipments to that country rising by 7%, due mainly to growth in the sales of meat and soybeans as well as higher prices for minerals such as copper. Exports to the European Union are seen growing by 6%, and those to the United States by 5%. 

With regard to intraregional trade, it is expected to grow by around 1%. Because extraregional shipments are forecast to experience more dynamic growth than those within the region, the intraregional trade ratio is seen declining slightly, from 14% to 13%.

Meanwhile, it is estimated that the value of regional services exports in 2025 will rise by 8%, which is one percentage point below the growth registered in 2024. Despite this, these exports continue to outpace goods exports in value terms.

Technology intensity and advanced human capital intensity

In its third chapter, ECLAC’s annual report explains that the production and exportation of high-technology or human capital-intensive goods and services is a key factor for driving productivity and competitiveness. The production of high-technology goods has a multiplier effect on economic growth and skilled job creation. The same is true of trade in services, in particular modern services (that are digitally delivered). Increased internationalization of these sectors could help to overcome the trap of low capacity for growth affecting the region.

However, the report concludes that the region’s participation in these segments continues to be limited. Its share in the global export of high-technology goods systematically remained below 5%, and in the case of modern services, below 2%. On a regional level, Mexico accounts for 85% of the export of high-technology manufactures, while Brazil leads in the area of modern services (33%). 

The current context of redefined globalization and reconfigured global value chains – in which the dispute for leadership in strategic industries and technologies plays a central role – opens up new opportunities for the region to reposition itself in knowledge-intensive markets. To this end, ECLAC recommends a dual strategy: fostering productive policies that would increase regional participation in advanced goods and services exports, while also strengthening the institutional capabilities needed to design, coordinate and sustain these policies, in their technical, operational, political and prospective dimensions (TOPP capabilities).