The victory of Donald Trump in the presidency of the United States sets the tone for the global agenda, but in addition to the Colombian one due to the series of implications of the arrival to the Oval Office of the now president of one of the world powers.
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According to the experts consulted, Trump’s second presidency will have direct and indirect effects in Colombia and a series of challenges at an economic level and in commercial and diplomatic relations between the two nations.
One of the short-term effects is the rise of the dollar in the country. According to Álvaro Humberto Ojeda, executive vice president of Values AAA, Investment Banking (BVC), Currency volatility could persist if the US president maintains his protectionist stance.
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“This would have a direct impact on the exchange rate in Colombia, raising the TRM and making imports more expensive, which can affect the cost of living and input costs for the Colombian industry.”, he indicated.
Now, if the short-term effects begin to be felt, Donald Trump’s policies and positions are framed in a series of uncertainties, especially in trade matters. For the president of the Colombian American Chamber (AmCham Colombia), María Claudia Lacouture, One of Trump’s priority focuses will be trade policy.
He mentions that an increase in protectionism and the imposition of tariffs is possible, although the US president also will seek to strengthen strategic alliances with allied countries in geopolitical and geographic terms, which may represent an opportunity for Colombia to consolidate itself as a strategic partner in the region.
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United States Elections
EFE
“Trump’s “America First” policies prioritize protecting American industries and companies considered critical to national security. However, given that Colombia does not make significant imports of these sensitive goods, its vulnerability to these measures is limited.”Lacouture assured.
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From another point of view, Theodore Kahn, associate director of Control Risks, stated that Trump has threatened to implement tariffs of between 10 and 20% on all trading partners, but that this situation would not be fully addressed in Colombia.
Rather, he opined, that regionally these types of tariffs would be focused on economies like Mexico, taking into account that they have a high level of economic integration with the United States. in manufacturing industries, which is where there is a significant trade deficit.
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“In the case of Colombia it is the opposite. There is a trade surplus and there is not a very high level of integration as is the case with Mexico in strategic industries that Trump cares about a lot and that he wants to strengthen. This makes it very likely that Colombia will not be the focus of Trump’s trade policy, which turns out to be positive.”, he reflected.
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Bloomberg
Álvaro Humberto Ojeda detailed that Trump could impose additional tariffs on products that compete with the local US industry and although the FTA with Colombia limits this possibility in principle, there could be changes in terms or pressure to renegotiate. Sectors such as agriculture and textiles, which depend on access to US markets, would be the most affected.
He added that there could be instability in Foreign Direct Investment because Trump’s “America First” rhetoric could cause US companies to prioritize local investments over international ones, affecting FDI flows to Colombia. This would impact sectors such as infrastructure and technology, which depend on foreign capital for their development.
Another point of impact is in the commodity export sector, since the Colombian economy depends on external sales of oil, coal and coffee. “A Trump focus on increasing energy production in the US could reduce demand for foreign oil, affecting Colombian export revenues and creating instability in key sectors of the national economy.”, he indicated.
(Read more: ‘The American people have spoken’: Petro congratulates Trump on his victory)
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An FTA in play?
Precisely one of the biggest concerns with the arrival of Donald Trump to US power is the FTA with Colombia. It should be noted that in the past, the Colombian government had taken into account renegotiation and changes, although that simply remained in closed-door meetings with the United States government itself.
(See more: The perfect storm that is being generated for the peso in Colombia)
For this reason, María Claudia Lacouture highlighted that the current trade agreement between the United States and Colombia offers a framework of legal security that restricts the imposition of unilateral barriers by the United States towards Colombia. “This has the potential to keep trade and investment between both countries in a state of relative stability, even in the context of possible political tensions between Presidents Trump and Petro“, said.
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Along the same lines, the associate director of Control Risks, Theodore Kahn, explained that it is unlikely that Trump will suggest a renegotiation of the FTA with the country, as was done in the case of Mexico in his former mandate. because Colombia does not have the “level of relevance” in specific industries that do move the floor for the now president.
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“We have to see how aggressive Trump ends up being on the issue of tariffs because I think that will largely determine the implications for growth prospects globally and also for key economies.”, he noted.
Now, the president of the National Association of Foreign Trade (Analdex), Javier Díaz, assured that at this moment Various questions arise regarding many topics that President Trump has spoken about.
“We must ask ourselves how this protectionist trade policy exposed by President Trump during the campaign will be realized, if this is a dispute exclusively with China or will it affect all countries. We have to look at how it develops, is it going to be respected or, as in the past, for reasons of national security, are tariffs going to be raised? How is the bilateral agenda between Colombia and the United States going to be reconfigured?”, the union leader asked himself.
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Thus, he highlighted that there are a series of questions that necessarily have to begin to be unraveled in the coming days, when the president specifically announces his policies. “I think there will also be opportunities in that trade war between the United States and China. Are we going to take advantage of the opportunities that will be there? I think it is also a challenge for Colombia.”, he assured.
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Finally, Martín Ibarra, president of the consulting firm Araujo Ibarra, explained that Colombia has “quite a few” opportunities given the overheating of Mexico. “The country can become the next nearshoring mecca in Latin America, if we maintain good relations. We have the best trade agreement in the world under conditions of origin with this country, more efficient ports and airports and 116 free zones in operation”, he concluded.
