As this new era of turbulence unfolds, geopolitical concerns have surged to the top of the corporate agenda. A relentless wave of tariffs, supply chain disruptions, armed conflicts and even the spectre of nuclear threats have redefined the global business landscape. No longer abstract risks, these forces are now front and centre, compelling companies to rethink strategies, rewire supply chains and brace for impact in a world where volatility is the new constant.

Leading the charge is President Trump, whose latest wave of tariffs marks a return to economic nationalism. His administration’s protectionist push, rooted in a mix of tariffs, tax cuts and deregulation, reshapes the global trade order. What sets these tariffs apart is their unapologetically transactional nature. The result? Even allies like Argentina’s right-wing President Javier Milei, who has courted Trump, were offered no favours. Argentina and Brazil, despite their trade deficit with the US, were hit with the baseline 10 percent tariff, alongside countries like Chile, Colombia and Peru, to name a few.

Mexico and Canada, however, managed to sidestep this round, but their previous duties still linger. Goods from both nations that comply with the United States-Mexico-Canada Agreement (“USMCA”) are largely spared. Still, autos, steel and aluminium exports remain subject to separate, more stringent tariffs. This follows Trump’s earlier decision to impose a 25 percent tariff on these countries over migration and fentanyl trafficking concerns before later carving out exceptions for USMCA-compliant goods. 

In this flurry of fluctuating tariffs and trade uncertainty, businesses across Latin America are forced to re-evaluate their strategies. According to the International Institute for Management Development (“IMD”) and Boston Consulting Group (“BCG”), companies are honing in on three key actions: ensuring compliance with sanctions and regulations, assessing exposure to geopolitical risks and identifying mitigation measures, even if it means overhauling corporate strategy. When the bottom line is at stake, businesses have no choice but to pay attention. 

Companies throughout the region are taking proactive steps to shield their operations from future tariff shocks. “Every organisation should have a risk management programme tailored to its size and complexity,” advised the CEO of a major multinational consumer goods firm in Latin America. “Key risks — political, reputational, competitive, cost-related, credit and cybersecurity threats — should be reviewed and updated regularly.” This kind of forward-thinking approach is becoming increasingly vital as businesses brace for the uncertainty ahead. 

“Every organisation should have a risk management programme tailored to its size and complexity.”

CEO of a major multinational consumer goods firm, Latin America

Historically, many investment managers steered clear of trades involving geopolitical risk, viewing them as difficult to quantify or mitigate. But times are changing. The head of research at a multi-strategy hedge fund bluntly stated, “In part, this probably came from the fact that investment-oriented people see the world very differently from political decision-makers, and that creates significant gaps in their understanding.” Yet, in today’s volatile climate, avoiding such risks is no longer a luxury. “Politics and geopolitics have crept further into the realm of business,” the hedge-fund researcher noted. “It’s more difficult to avoid than ever.” 

Geopolitical conflict has not just posed challenges but also presented opportunities for Latin America. Sectors that rely on supply chain diversification have been particularly adept at adapting. A senior macro analyst highlighted, “Latin American industries have had to navigate several geopolitical shifts which have prompted developed economies to increase trade with the region, benefiting from clearer trade routes.” 

While China remains the largest trade partner for many Latin American countries, some sectors are already pivoting. Chilean mining firms, for instance, have started redirecting exports to the US and Argentina is pushing for a Free Trade Agreement with the US. “I do not rule out the possibility that an overly broad tariff policy could drive the rest of the world to strengthen trade ties,” the senior macro analyst added, signalling movement in global trade dynamics. 

“I do not rule out the possibility that an overly broad tariff policy could drive the rest of the world to strengthen trade ties.”

Senior macro-analyst, LatAm

Mexico, in particular, has already developed sophisticated models to assess the economic impact of tariffs. “The government has taken a pragmatic approach to negotiations,” the senior analyst stated. “This could allow Mexico to benefit as the US imposes more aggressive tariffs on other countries, like China.” 

As geopolitical risks continue to redefine the global business environment, the message is clear: companies must take a proactive stance. As the head researcher concluded, “Having specialists who not only understand political processes but also the psychology of decision-makers is increasingly crucial.” In a world where uncertainty is the new normal, those who fail to adapt risk being left behind in the fray.