H
Harpy Eagle
Guest
Latin America is anxiously counting the days to Nov. 5, when U.S. voters will choose between relative continuity under Vice President Kamala Harris or a return to policies that triggered volatility in the region's largest markets and economies under former president Donald Trump.
Trade and tariffs, as well as monetary policy's effect on global interest rates, are likely the largest avenues for the election to jolt the U.S.'s neighboring region. Washington's economic war with China could particularly rock Mexico and boost Brazil, especially in a tit-for-tat scenario.
On a broader level, a Trump victory would likely send shockwaves through the region, potentially putting the squeeze on some currencies and central banks even as countries that are more tied to commodities or trade with China could emerge largely unscathed.
An extended tariff war would push more of the countries in our hemisphere closer to China, giving them a larger foothold in our side if the world.
And then there is this...
A Trump presidency is expected to raise the U.S. budget deficit more than a Harris administration, driving inflation, as well as interest rates, higher. Tighter financial conditions globally could also weigh on Latin American assets.
"If Trump wins and the deficits are a bit larger, then the disinflation process could be a bit slower, and that could translate into a slightly slower monetary policy easing" in the U.S., Vontobel's De Sousa said. Tighter monetary policy in the U.S. has historically translated into subdued financial asset prices across emerging markets, including Latin America.
