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Cheap Chinese Goods Overwhelm Latin America, Squeezing Local Industries
China-US: Following US tariffs, China has increased its exports of cheap goods to Latin America. This has benefited consumers, but has increased pressure on local industries and jobs, leading many countries to impose tariffs and other protective measures.
After the US, under its current president, Donald Trump, imposed various tariffs and made several geopolitical moves, China has managed to tap into the lucrative Latin American market, and as a result, the region has been flooded with cheap Chinese cars, e-commerce, clothing, and electronic goods.
China's domestic demand is low, and the production capacity of many industries has increased. As a result, Latin America, with a population of over 600 million and a growing middle class, is seen as an alternative destination for China's companies. Last year, China's exports to the US fell by close to 20%, but those to Latin America and other regions grew.
According to Margaret Myers, director of the Asia-Latin America Program at the Inter-American Dialogue think tank, Latin America has the purchasing power and real demand, making it the easiest region for China to absorb excess production.
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Cheap Chinese goods are a relief for Latin American consumers, but a challenge for small businesses. Chinese platforms Temoo and Shein have rapidly increased their market share. According to Sensor Tower, Temoo's average monthly active users in Latin America reached 114 million in the first half of 2025, a 165% increase in one year. Shein's users also grew 18%.
The number of shops filled with Chinese goods in downtown Mexico City has more than tripled in recent years. Local shopkeepers are struggling to keep up with the competition.
The situation is more serious in Argentina. According to government data, e-commerce imports (mostly from China) jumped 237% in October. Textile industry organizations say that due to record imports, factories are operating at low capacity and leading to layoffs.
In Mexico and Brazil, Latin America's auto hubs, pressure from affordable Chinese cars is mounting. Brands like BYD and GWM are rapidly gaining market share. Chinese brands accounted for over 80% of EVs sold in Brazil in 2024. Mexico, meanwhile, became the largest import destination, importing 62.5 million Chinese cars.
According to Paul Gong, Head of China Auto Research at UBS, China has a clear advantage in EVs due to affordable prices and government support. However, both countries have strong auto industries and are wary of competition.
China needs Brazil's lithium, Chile's copper, and Peruvian fishmeal, but trade deficits with several countries are widening. Mexico's deficit with China reached $120 billion in 2024. Argentina's deficit was $8.2 billion in 2025. Brazil and Chile do have some surpluses, but overall imports from China are strong.
Between 2014 and 2023, China provided $153 billion in loans and grants to Latin America and the Caribbean, nearly three times that of the United States. Projects like Peru's Chancay megaport demonstrate China's deep presence.
Mexico has imposed tariffs of up to 50% on Chinese imports. Brazil and Chile have reduced/eliminated tax exemptions on low-value parcels and raised EV import duties. Analysts believe further protectionist measures may be coming, but countries must strike a balance given China's strong economic influence and the risk of retaliation.
