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U.S. Reengagement with Latin America

The Russian invasion of Ukraine has destabilized global supply chains and provoked reassessments in international political compromises that have enabled globalized growth. It also served to deepen the ideological wedge that exists between the West and those who seek alternative systems: China, Russia and India. 


Due to decreasing birth rates, declining economic prospects, erosion of national capabilities of some countries and overseas conflict forecasts, the U.S. is experiencing a “reshoring” phenomenon for industries heavily dependent on uninterrupted supply chains and certainty from the rule of law and a strong labor force. 


Reshoring is an economic term used when businesses relocate manufacturing or service operations back to their region of origin. This reshoring has included Latin America due to its proximity to U.S. markets, abundant natural resources and certain economic factors that signal a future growth trajectory.


This change in U.S. interests may present an opportunity to re-engage with Central and South America to not only resolve complex migration issues but also help promote shared economic growth and prosperity equitably. 


U.S. export and import trade with American partners stands at $174 billion and $120 billion respectively. In geopolitical terms, other nations, such as China, see the value in investing in partnerships with Latin America. They have become the continent's primary trading partner, particularly when it comes to raw materials necessary to sustain a developing economy. 


This shift has caused some issues, with the U.S. providing a $3.5 billion loan to Ecuador after the nation fell into unsustainable debt to China, and has raised further concerns regarding China’s “Debt Trap Diplomacy.” If current disengagement trends continue regarding U.S. foreign policy, increased economic opportunities with Latin American partners may arise.


Matthew Reyna is a recent graduate of the University of California Irvine, where he received a Bachelor’s Degree with a double major in International Studies and Political Science. He served in the U.S. Army Reserve and is currently preparing for graduate school where he hopes to gather the necessary skills to become a geopolitical analyst. He is contributing to ONC’s mission as the Foreign Policy & Defense team lead.


Sources:

Gilbert, Jonathan, et al. “How China Beat Out the U.S. to Dominate South America ''. Bloomberg. February 17, 2022. https://www.bloomberg.com/news/articles/2022-02-17/china-is-south-america-s-top-trading-partner-why-can-t-the-us-keep-up?sref=pZhFKzO1.

Schwartz, Nelson D. “Supply Chain Woes Prompt a New Push to Revive U.S. Factories”. New York Times. January 5, 2022. https://www.nytimes.com/2022/01/05/business/economy/supply-chain-reshoring-us-manufacturing.html.

Sevastopulo, Demitri. “US development bank strikes deal to help Ecuador pay China loans”. Financial Times. January 14, 2021. https://www.ft.com/content/affcc432-03c4-459d-a6b8-922ca8346c14.

“Trade in Goods with Central and South America”. United States Census Bureau. https://www.census.gov/foreign-trade/balance/c0009.html.

Xuetong, Yan. “China’s Ukraine Conundrum”. Foreign Affairs. May 2, 2022. https://www.foreignaffairs.com/articles/china/2022-05-02/chinas-ukraine-conundrum?check_logged_in=1.

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