Jun 14th 2026|São Paulo|5 min read
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FOR AMERICA’S neighbours, Donald Trump’s second term has been more unsettling than for most. As well as disrupting trade and sending energy prices soaring—bad news almost wherever you are—Mr Trump is determined to impose his will on the western hemisphere. He has kidnapped the leader of Venezuela, sent gunboats to the Caribbean and threatened to invade Cuba.
Yet Latin America has been well placed to benefit from Trumpian chaos. After a lull in 2024, in 2025—Mr Trump’s first year back in office—foreign direct investment (FDI) rose to $204bn from $167bn (see chart 1), while flows to the rest of the developing world shrank. Mergers and acquisitions (M&A) were up by nearly half. An index tracking Latin American stock markets, compiled by MSCI, an investment firm, has risen by 60% since the start of 2025, beating emerging markets as a whole (even despite a decline after bombs started falling in Iran, see chart 2).
Chart: The Economist
Chart: The Economist
It helps that Latin America is no longer a place of unstable currencies and spiralling inflation. All 33 countries south of the Rio Grande, save Argentina and Brazil, float their currencies or peg them to the dollar. Inflation-targeting central banks and fiscal reforms have slowly persuaded investors in. Between 2005 and 2019 the region’s GDP grew, on average, by a steady 2.8% a year. Pharmaceuticals, fintech and mining—on which Chinese investors were especially keen—have all attracted foreign money.
That is not wholly coincidental. Mr Trump believes that America should have closer economic ties with countries it wants to influence. Latin America, investors reckon, tops the list. To take the most brazen example, in October his Treasury extended a $20bn swap line to Argentina to help Javier Milei, the president and a Trump ally.
American officials say that alternative sources of finance are necessary to dilute the influence of Chinese investors. Latin America has vast troves of minerals that Mr Trump wants to secure, including more than a third of the world’s proven reserves of copper and many of the most viable deposits of rare-earth minerals. It also exports more oil than it imports, lessening the blow from rising energy prices.
At least half of last year’s increase in foreign investment came from America, according to officials from the UN’s trade agency. A little came from the government itself. Some came from American businesses friendly with the administration, chivvied by Mr Trump and the rest from private investors. In March 2024 the Development Finance Corporation, the American government’s foreign-lending arm, set up its first office on the continent in São Paulo. At a dinner for investors in a swanky steakhouse in the city, conversation glided smoothly between speculation over where the most promising industries are located and where Mr Trump could next use force.
Mining—already in the midst of a worldwide investment boom—has been a clear beneficiary. Between January and September 2025 Latin America accounted for three-quarters of the industry’s spending on M&A. This year America has struck deals with the governments of Argentina, whose lithium reserves are mostly untapped; Paraguay, a source of lithium, titanium and uranium; and Chile, the world’s largest producer of copper. It lent nearly $600m to Serra Verde, a Swiss-registered firm developing a Brazilian deposit of ionic clay, a source of rare-earth elements. An American rare-earths miner part-owned by the federal government then acquired the company for $3bn. Smaller investors have bet on deposits ranging from gold in Peru to tantalum in Venezuela.
Established giants have spent the biggest sums. The urgency of American officials to secure resources has led several of them to fast-track existing projects, says a mining boss. In March Australia’s BHP, which runs the world’s biggest copper mine, in Chile, announced a $5bn expansion. According to an American official, more than $5bn will be spent in Chile in 2026 to get resources out of the ground in 2027 alone. Another large miner is considering reserving the proceeds of some new mines solely for American customers.
Mr Trump may be provoking non-Americans into action—not least the Chinese, whose enthusiasm had cooled after the pandemic. BYD, a carmaker, is expanding operations in Brazil. In January Chile announced it was considering an undersea fibre-optic cable to Hong Kong, to be built by a Chinese firm. American officials were sufficiently outraged to ban the Chilean politician overseeing the cable from the United States.
Europe has also strengthened its economic ties. In January the European Union signed a free-trade deal with four members of Mercosur, a South American trading bloc. Argentine and Brazilian farmers, who produce beef more cheaply than their EU counterparts, are expected to be among the biggest beneficiaries. The agreement had been in the works for 25 years, but Mr Trump’s tariffs prodded policymakers to get it over the line. According to Bloomberg Economics, a research firm, the deal could eventually boost the Mercosur countries’ combined GDP by 0.7%.
Despite all this, the good times are by no means sure to last. Investors’ interest is partly based on hope that Mr Trump means to build supply chains in Latin America, as his officials claim. But Mr Trump has only two and a half years left in office, a short attention span and a shorter fuse. His enthusiasm could fizzle. And if he resorts to violence again, some investors would be scared away.
And despite recent improvement, many of the region’s economies have plenty of long-running problems. The finances of Brazil, the biggest, are weighed down by pension costs the government cannot afford. Argentina still relies on the IMF to balance its books. And Mexico’s GDP contracted in the first quarter of 2026. Add a shortage of infrastructure, a lack of skilled workers and stifling bureaucracies, and the picture looks altogether gloomier.
Ramon Barúa Costa of Aclara Resources, a five-year-old Brazilian mining firm that has received $5m from the American government, says that, helpful as that has been, he could get much more by moving some operations to the United States—and also be closer to researchers and chemicals needed for processing. Aclara’s next ore-separating facility will open in Louisiana. A superpower’s investment can be a mixed blessing. ■