Some major Latin American economies look among the most exposed to the steel and aluminium tariffs (Mexico and Brazil) and reciprocal tariffs (Argentina and Brazil) announced by US President Trump this week. But given that Argentina and Brazil are relatively closed economies that don't rely heavily on the US for exports, we think the economic hit would be manageable. And for Mexico, the bigger threat is that the proposed 25% tariff on all imports comes into effect in March if the US determines that it’s not done enough to stop drug and migrant flows. Elsewhere, the surprisingly hawkish tone in the minutes to Chile’s January monetary policy meeting published this week means that we now expect a prolonged pause in the easing cycle.
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