The writer is president and CEO of Global Location Strategies, a global site selection consultancy, and also a member of the Site Selectors Guild. E-mail: didicaldwell@glsconsults.com

The relationship between the US and Latin America has always been, in a word, complex. Even before Mexican and US forces fought the Battle of the Alamo in 1836, politics, economic interests and constantly shifting alliances have defined the interplay between the Anglo and Latin Americas. 

Regardless of historical record, the changing world order represents new opportunities for the region to align on hemispheric ideals and create a formidable global alliance. Additionally, the rising risk premium associated with international investment is compelling companies to strengthen economic ties with partners closer to home.

For the US, one Latin American opportunity is a familiar refrain: its abundance of natural resources, particularly those crucial for clean energy and electric vehicles. The US government is offering lucrative incentives for investment in these sectors, eager to catch up with China which has been the largest financier and consumer of these commodities globally. In addition, countries like Venezuela, with an all but defunct state oil company, and Guyana, with a brand new one, desperately need the capital and expertise that US companies can provide. 

An opportunity for Latin America lies in manufacturing. The region effectively serves as a gateway to the US market for Chinese firms looking to sidestep US tariffs, which have continued to climb under Donald Trump and Joe Biden’s presidential terms. Mexico has been the biggest beneficiary, given its proximity to the US and membership in the US-Mexico-Canada Agreement. According to fDi Markets, announced capital investment into Mexico from China increased from around $2bn in 2021 to $6bn in 2023. Also last year, the US imported more from Mexico than China for the first time in 20 years. Other Latin American countries can also take advantage of these trade policy shifts, provided they have the labour, developable properties, utilities and infrastructure to support new investment.

While opportunities are plentiful, the road ahead is rocky. There is lingering resentment of US meddling in Latin American domestic affairs, and uncertainty that Latin American governments can maintain a business environment where foreign investors can succeed. Nonetheless, a weakening China, sanctioned Russia, manufacturing shifts and high demand for Latin American resources and labour may just be the right atmosphere to support a new era in trade relations between neighbours in the Americas.

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This article first appeared in the June/July 2024 print edition of fDi Intelligence.