The Impacts of US Elections on Colombian Economy; Coffee Exports
The Impacts of US Elections on Colombian Economy; Coffee Exports
Coffee Network (Bogota)- The potential victory of Donald Trump in the US poses challenges to Colombian exports, including coffee, amid the proposal to impose tariff on imported goods, the Colombian-American chamber of commerce (AMCHAM) said.
A potential second Trump term could bring significant challenges for Colombia. His proposal to impose universal tariffs of between 10% and 20% could affect global trade and negatively impact Colombia's Gross Domestic Product growth. Additionally, although it is unlikely that the Free Trade Agreement (FTA) between the two countries will be substantially modified, Trump's protectionist approach would generate friction in trade relations. Therefore, Colombian companies, especially those that export to the United States, should prepare for a more volatile and competitive environment, according to consultancy Control Risks, cited by AMCHAM.
The US is Colombia’s main export market for coffee. The US purchased 3.031 million bags of 60-kg of Colombian coffee in January-August, representing 38.92% of the country’s total coffee exports of 7.787 million bags in the first eight months of the year. The 3.031 million bags are worth $857.05 million.
The US remains Colombia's main trading partner, representing 27% of its exports, 32% of foreign direct investment, more than one million tourists annually and around 130,000 direct and indirect jobs. "In addition, its relevance in areas such as nearshoring presents important opportunities, but to take advantage of them it is essential to strengthen bilateral relations, fulfill commitments and generate trust through public-private collaboration that offers stability and legal certainty."
The effects of the US elections on Colombia go beyond the bilateral relationship, as possible indirect events such as a recession in the US or an economic slowdown in China could significantly impact the Colombian economy, which depends on foreign trade and the stability of its main trading partners.
According to Control Risks projections, a Trump victory could trigger a settlement of the trade dispute with China, which will maintain the reconfiguration of global supply chains and bring risks, such as an increase in imported costs and inflationary pressures, as well as opportunities to attract investments in emerging sectors that would diversify the Colombian economy. Additionally, the search for countries aligned by geopolitics will be a priority over distance and price.
“Ultimately, the upcoming US elections will have a considerable impact on Colombia, given that both Kamala Harris and Donald Trump present different approaches to Latin America. This means that Colombia will need to adapt quickly to changes in US foreign policy and adopt a proactive stance, ensuring that its bilateral relations continue to be a fundamental pillar for its economic and social development,” the Colombian-US chamber of commerce, says citing Control Risks.
For Colombia, relations with the United States will continue to be based on diplomacy, but it will be key for the country to take the initiative to ensure fluid and mutually beneficial cooperation, regardless of the outcome of the elections, AMCHAM added.
The victory of the Democratic candidate Kamala Harris could lead to the continuity of moderate policies in areas such as migration and international cooperation. Under her mandate, Colombia is expected to continue receiving support in key aspects such as the fight against drug trafficking and security, but with a more comprehensive and less coercive approach than that implemented by a Republican government. However, this could generate tensions in the bilateral relationship if the expectations of reducing coca and cocaine crops are not quickly met.
In addition, Harris could prioritize human rights, labor issues, and social justice, aligning with some of the goals of President Gustavo Petro. On the economic front, the Harris administration could offer commercial stability to Colombia, with less pronounced tariff tensions and the continuity of trade agreements such as the Free Trade Agreement (FTA) between the two countries. This would create a more predictable and stable business environment, which would be favorable for the Colombian economy, according to Control Risks projections.
On the other hand, Donald Trump's return to power would imply a more aggressive approach to security and migration issues, similar to the one he implemented during his first term. This could generate tensions with Colombia, especially if President Petro's government does not align itself with the policies demanded by Washington. Regarding drug trafficking, the Trump administration could adopt a stricter stance, threatening to decertify Colombia as an ally in the fight against drugs and suspending cooperation programs, which would have economic and reputational repercussions for the country.
By Diana Delgado
