Is Trump's Latest Trade Tantrum Latin America's China Opportunity?

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Unless you’d given up your iPhone for Lent, you're probably aware that the long-dormant trade war between the White House and Beijing has flared up.

In recent months we have been highlighting the importance of China’s growing middle class to Latin America. The tariffs China has proposed on US exports of fruits, pork, metals, and soy would feed directly into this opportunity and be an unalloyed blessing to Latin American exporters — who now have a 15-25% leg up on their US competitors.  Certainly, other exporting regions are treating it such — is this Latin America’s time to shine?

Latin American exporters are evaluating the opportunity — Brazilian meatpackers are excited that they will have a an edge on their US counterparts. Capital Economics thinks there may not be enough soy in the world outside the US to meet Chinese demand, which will be a boon to soy prices for exporters in Brazil, already benefiting from the drought in Argentina. And Mexico sees an opportunity to attract more investments from Chinese firms.

However, the larger picture brings concerns, which are being voiced in places such as Colombia, Brazil, and Chile.

First, some areas are already feeling the impact of the trade war. Those are areas such as the Caribbean coast of Colombia, which depends on metals to the US as its second largest export. Not exempt from the tariffs imposed by the US, they have already started feeling the impact of the trade war.

Second — and more importantly — a trade war has the potential to spiral out of control. Right now China is reacting — threatening to impose tariffs on the US equal in value to those imposed by the US on China — and not trying to escalate the situation. But the EU and other markets may respond in turn. This could have long-lasting impact, as global trade would decline and investment would be reallocated away from global supply chains. As former Commerce Secretary Carlos Gutiérrez puts it:

"There is no doubt that if there is a trade war between the US and China, and it gets difficult, the global economy will enter into recession, and this is no good for anyone."

Top Stories

China miner Tianqi meets with Chilean anti-trust prosecutor on SQM — Reuters
Representatives from China’s Tianqi Lithium met with Chile’s top anti-trust prosecutor, Felipe Irarrazabal, following Chile’s blockage of its bid for a stake in Chile’s SQM. Chile’s development agency Corfo seeks to block any sale of Canada’s Nutrien LTd stake in SQM to any Chinese bidder as it would “gravely distort market competition.” The prosecution has until August to decide if it will launch a full investigation.

México impone cuotas compensatorias a Corea, India, España y Ucrania — Excelsior
México impone cuotas compensatorias en tuberías de acero a Corea, España, India y Ucrania — El Financiero
Protectionism is on the march. Following an investigation over unfair trade practices, Mexico has decided to impose compensatory quotas on carbon steel pipe imports from Korea, Spain, India, and Ukraine.

EUA exigem revisão de cota a etanol para negociar aço com Brasil, diz diretor da Fiesp — Folha de S. Paulo
“It’s a fact that the paradigms of commercial negotiation in the US have changed,” said Thomaz Zanotto, foreign commerce director at Fiesp, a Brazilian trade association. To avoid the announced steel and aluminum tariffs, at a meeting in Washington, the US sought a revision of the bilateral ethanol agreement, as well as an agreement to keep China from reexporting steel shipments through Brazil.

Será TPP de beneficio para Sinaloa — Noroeste
Rafael Rodríguez Castaños, of the Mexican state of Sinaloa, is bullish on the TPP: “It’s a very attractive trade bloc, complemented with access to skills, technology, of innovation, as what we are looking for is to become a more competitive country, which can have access to foreign technology.”

Uber’s next battleground: Latin America — Venture Beat
The battle for the king of ride-hailing continues. Uber finds itself creating alliances and selling business in order to keep itself in the competition, while China’s Didi, already owner of Brazilian 99, sets out to begin its first international service in Mexico City; both countries currently Uber strongholds. As more and more firms rise up and secure investment, Uber will have to rethink its approach to retain its market share.  Easy Taxi, operating throughout Latin America, has already raised $80m.

Catamarca y otras provincias conformarán la “Mesa de litio” — Noticias y Protagonistas
Avanza la guerra del "oro blanco" en el Norte argentino y toman medidas — Contexto Tucumán
Argentina is imposing clearer and stricter rules on the international battle for its lithium reserves. It is estimated that FDI totals $2b over of 53 different projects. A “Lithium Board” (Mesa de Lition) composed of the national government, and the governments of Catamarca, Salta, and Jujuy provinces will focus on increased environmental protection and limiting license concessions. Recent events, such as Colombia’s nationalization of its reserves and Chile's recently setting limits on foreign ownership, are spurring the move.

11 países participarán de la sexta edición internacional Expomecánica Perú 2018 — El Economista
The 6th International Show of Autoparts, Mechanical Implements and Automotive Service will take place in Miraflores, Peru, early next month. Countries attending the fair include the US, China, Argentina, Mexico, Brazil, Ecuador, Panama, India, and Taiwan.

3 de los autos preferidos por los mexicanos, hechos en China e India — Dinero en Imagen
Three of Mexico’s most popular cars hail from India and China; of the 65% vehicles Mexico imports, half come from Asia.

China — LAC

Panamá: Vuelo desde China aterriza el 5 de abril — Estrategia y Negocios
Today is the day. Air China's first flight between Beijing and Panama City lands today, less than a year from when the two countries started bilateral diplomatic relations.

中石油首次向美洲出售汽油 3.5万吨起航开往巴哈马 — Sina
CNPC, el gigante chino del petróleo, desembarca en América con su primer cargamento de gasolina — Infobae
On the evening of March 30th, the “Overseas Mykonos” carrying 35,000 tons of 91 octane gasoline produced by the Qinzhou Petrochemical Company refinery in Guangdong, set sail for the Bahamas. This believed to be is the first time that products produced by PetroChina’s refineries are sold into the Americas; further proof of PetroChina's global ambitions.

拉美最大航展在智力举行,F35A战机首次亮相 — Xinhua
This year at FIDAE 2018, Latin America’s biggest aerospace and defense show, two Chinese companies participated in the airshow: China Electronics and Tongfang Weishi Technology.

Mincetur a exportadores: ¿Cómo ingresar sus productos al mercado chino? — Gestión
Peru’s Ministry of Foreign Commerce and Tourism has published a Manual of Origin Regulations document on China and Peru’s free trade agreement, including how Peruvian business can enter the Chinese market, and the benefits of reaching out.

陈安宁站台新车巴西发布会,拉美市场奇瑞势在必得 — Feelcars
The Chery Tiggo 2 (known as the Tiggo 3x in China) was officially unveiled in Brazil. Chen An-ning, head of Chery Automobile visited Brazil. This is the first time he has attended a new product launch conference in a foreign country. He sees a huge market potential and regional influence in Brazil.

China y México fortalecen lazos en ciencia y tecnología — El Diario  NTR
Tienen México y China nueva etapa de colaboración científica — Universal
Jaime Urrutia Fucugauchi opens the ‘Sino-Mexican Collaborations in Science and Technology' colloquium at the Colegio Nacional he noted that Mexico needs to invest in education. Along with Zhu Hao, director of science and technology for the Chinese embassy in Mexico, he explored the projects set in place and agreed over the long term benefits for Chinese investment in science, innovation, and technology in Mexico.

La Argentina tendrá su “pabellón turístico" en Alibaba y busca atraer 150.000 chinos al país — La Nación
Argentina’s National Tourism Promotion Institute (Inprotur) and Alibaba are planned to sign an agreement at the World Travel & Tourism Council (WTTC) to include a virtual Argentina “trade pavilion" on Alibaba, with the goal of attracting 150,000 Chinese tourists to Argentina in 2019.

Chilena Codelco consolida recuperación gracias a China — Swissinfo
Chilean state-owned Copper producer Codelco announced a $2.8b profit for 2017, six times more than 2016, due to higher prices and increased Chinese demand.

Mexico's former ambassador to China explains 'how China capitalizes where the United States is retreating' — Business Insider
Jorge Guajardo, Mexico’s former ambassador to China, discusses China’s place in the world. Gujardo doesn’t think that China is replacing the US as global hegemon, but he does believe China is in a position to “set the standards for many other companies for many years going forward” as they act in the international market while the US employs more protectionist policies.

Interview: E-commerce booming in Argentina, says expert — Xinhua
Diego Urfeig, executive director of the Argentine Chamber of E-Commerce (CACE), says that despite seeing rapid growth in Argentina’s e-commerce platform, it still has a lot to learn. As Argentinians increase demand for more diverse set of goods, Urfeig notes the country can learn from China’s Alibaba as it offers a varied selection of products and reaches beyond the domestic market.

Industria del Acero: Déficit comercial de América Latina con China sube en 8% y llega a US$ 23 mil millones en 2017 — Estrategia
Latin America's steel trade deficit with China rises 8% in 2017 — Platts
Latin America registered a commercial deficit with China in 2017, reaching $23m, 8% more than 2016, due to higher prices for raw materials and steel products.

China's chicken imports to drop, thanks to fallout from Brazil food safety probe — Agrimoney
Limited supply from the world’s largest poultry exporter, Brazil’s BRF, has lowered the outlook for Chinese chicken exports to 300k tonnes this year. BRF became embroiled in a scandal regarding food safety checks and, as Brazil supplied 85% China’s poultry imports in 2017, it will be hard for major trading partners to fill the gap.

China has donated military equipment to Uruguay — Army Recognition
China donated $5m worth of military equipment to Uruguay under a Free Military Assistance Framework signed in 2016. The equipment includes 10 ambulances, 6 buses, 10 loaders, and more.

Galleons may arrive in May — Newsday
Uh oh. The ill-starred ferry destined for Trinidad and Tobago hit another obstacle as it couldn’t be berthed in Honolulu as expected. This delay pushes its Port of Spain delivery to May.

China e Brasil unem forças para grande impulso em energia renovável — O Petroleo
China and Brazil’s cooperative efforts through the China-Brazil Center for Climate and Energy Technology Innovation are working towards a wave-generated electric plant.

Expertos chinos discuten exploración de mercado latinoamericano con motivo de Expo Internacional de Importación de China — Xinhua
A seminar on the Latin American market was held in Shanghai ahead of the International Expo of China Imports that will take place in November in order to explore further opportunities for commercial relations between Latin American and Shanghai’s businesses.

Llegan a Argentina máquinas de mantenimiento ferroviario financiadas por China — Xinhua
Argentina’s Trenes Argentinos received today the first allotment of high-tech machines that will be used to maintain its tracks. This new acquisition comes as part of the financing deal between Trenes Argentinos and China Machinery Engineering Corporation, which seeks to reconstruct the South American country’s rail transport infrastructure.

Interjet planea firmar una alianza con la aerolínea China Hainan — Expansión
Following on launching flights between Mexico City and Beijing, Hainan Airlines is discussing a tie-up with Mexico’s third largest airline Interjet.

Japan — LAC

Japón dona a México tecnología de punta para medir peligro de sismos y tsunamis — Sin Embargo
Tecnologia japonesa analizará historia sismológica de México — El Universal
The Government of Japan has donated a seismic detector — with the fantastic name of Geoslicer — to Mexico. This new technology will allow Mexico to analyse its seismic footprint and determine seismic and tsunami activity.

Visto eletrônico aumenta turismo no Brasil — Convergencia Digital
Brazil’s Ministry of Tourism has announced increased tourism following the decision to extend its electronic visa system to the US, Australia, Canada, and Japan. Visa requests increased by 48.2% compared to last year.

Korea — LAC

Exportações da Coreia do Sul crescem 6,1% em março ante março/2017 — Jornal do Brasil
Exports from South Korea to Brazil increased 6.1% since last year, largely motivated by demand for semiconductors and petrochemicals.

ASEAN & Oceania — LAC

CPTPP to waive tariffs for goods traded to Peru, Japan — The Malaysian Reserve
Ahead of the enactment of the TPP, Malaysia is eyeing opportunities in several markets, including Peru and Japan. "The import duties for these goods currently range between 5% and 10%, and once the agreement is ready, Malaysian businesses will enjoy zero tariff on these items,” says Ministry of International Trade and Industry (MITI) secretary general and TPP chief negotiator Datuk Seri J Jayasiri.

India — LAC

India’s Shree Renuka to attempt sale of Brazil sugar mills again — Reuters
India's Shree Renuka will try once again to sell sugar mills it owns in Brazil, after objections from creditor BNDES. The Brazilian branch of the Indian company filed for bankruptcy in 2015 and has tried to sell two of its plants at auctions. U.S.-based private equity firm Castlelake LP is a leading candidate to bid for the mills.


QP, partners win 4 exploration blocks offshore Brazil — The Peninsula
After winning four blocks for exploration in Brazil, Qatar Petroleum is eying other opportunities in the region. “Our strategy of creating a large scale, value-adding international portfolio, while pursuing Latin America as an important core area for Qatar Petroleum,” says CEO Saad Sherida Al Kaabi.

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