ECLAC: LAC Should Diversify Its Trade Relations

Given the shift in United States (U.S.) 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.
The report titled “International Trade Outlook for Latin America and the Caribbean 2025: International trade in a new era of weaponised interdependence” details the recent evolution of the region’s trade, along with projections, analysing in particular the impact that the new United States trade policy has had on the region’s countries
According to the report, because of the various tariff hikes implemented by the United States since February 2025, Latin American and Caribbean (LAC) countries face, on average, an effective tariff rate of around 10%, 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%). Meanwhile, the average tariffs levied vary across some Caribbean countries. Tariffs levied from January 2025 and August 2025 for Trinidad and Tobago amounted to 14%, the Dominican Republic 12%, Jamaica 6%, and the rest of the Caribbean 3%.
The relative intensity of trade with the United States is also much higher in some LAC countries than in others. In 2024, the United States market accounted for around 60% of the Dominican Republic, almost half of goods exports from Costa Rica, 41% for Trinidad and Tobago, 21% for Barbados and 15% for Guyana. The United States remains the region’s main trading partner, but its relative importance has declined over the last 24 years. Its share of the region’s total exports fell from 56% in 2000 to 44% in 2024, and its share of total imports fell from 46% to 28%.
Overall, LAC countries face lower tariffs in the United States than several of the U.S.’s main trading partners, particularly from Asia. This situation creates opportunities for trade diversion in favour of the region’s exports, in sectors such as clothing, medical devices and agro-industry.
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 the U.S. In the first half of 2025, FDI project announcements in the region totalled US$31.374Bn, 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. The market size and economic momentum of all these partners, along with the relatively low level of exports from the region to the corresponding countries at present, offer significant opportunities for future growth.
Along with diversification of trade relations with extraregional partners, strengthening of regional economic integration is a strategic course of action that is essential to increase the global competitiveness of LAC and reduce its exposure to a more uncertain and protectionist international environment. Intraregional trade accounts for just 14% of the region’s total exports, which is one of the lowest levels in the world. This represents a striking growth opportunity, for most LAC countries, the regional market is the top destination for manufacturing exports and accounts for the largest number of exporting companies (especially micro-, small and medium-sized enterprises (MSMEs).

(Source: ECLAC)