October 22, 2025
In a new Insight LAC webinar, the current world order was discussed in light of the changes generated by the tariffs imposed by the United States.
The world is going through a historic shift in which uncertainty has become the new normal. This was explained by the experts during the recent webinar on Geopolitics and Implications for Latin America, organized by Insight LAC. In this scenario, businesses and governments must assume that volatility is here to stay, and that unexpected crises will be a permanent part of the global environment.
Renata Zilli, a Mexican specialist in International Relations and Global Economics; Nicolás Albertoni, a Uruguayan PhD and expert in International Relations and Economic Development; Esteban Actis, an Argentine PhD in International Relations; and Ana Basco, an Argentine specialist in International Trade and Director of Insight LAC, exchanged views on the current world situation following the announcement of tariffs by the United States. Together, they outlined the contours of the new global landscape.
The persistence of geopolitical instability was one of the key conclusions of the event. A new era is emerging in which unexpected crises will be recurrent. This is why businesses and governments must anticipate a permanently volatile environment.
In this scenario, geopolitics takes center stage. Issues that were once considered peripheral now play a central role in business and investment decisions. Sanctions, tariffs, cross-subsidies, export controls, and restrictions on foreign investment have become tools of power and coercion, a concept known as weaponization. This “weaponized economy” turns trade relations into a zero-sum game, unlike the traditional paradigm of global value chains (GVCs), which sought mutual benefits.
Even so, trade is adapting. What is being observed, at least for now, is “trade diversion” rather than a slowdown. Global trade flows seem to be “finding their way.” Companies are redesigning their supply chains to make them more resilient and are implementing strategies such as nearshoring (bringing production closer to key markets), friendshoring (prioritizing allied countries), and even omnishoring (diversifying across multiple global locations) to reduce dependencies.
Now, what are the specific implications for Latin America and the Caribbean (LAC) in this new scenario?
The region benefits from relative geopolitical stability. As a zone of peace, it offers an opportunity to become a reliable destination in a turbulent world, since investors seek locations that are less exposed to military conflicts or direct geopolitical risks. Nevertheless, this relative peace does not exempt the region from the indirect impacts of global tensions, such as imported inflation, financial volatility, or migration flows, making resilience essential.
One of the challenges the region must confront is weak trade integration. LAC presents the paradox of being highly connected to the global economy while remaining poorly integrated internally. Intra-regional trade is limited (approximately 15% of total trade, one of the lowest percentages in the world). This means that countries in the region depend heavily on extra-regional markets such as the United States, Europe, and China for their exports. The result is greater vulnerability to external shocks or “trade wars” among major powers. Strengthening regional economic integration through common markets and regional value chains, among other alternatives, is essential to reduce risks and increase collective bargaining power.
The webinar also addressed other opportunities for the region, such as nearshoring and omnishoring. The reorganization of global supply chains in search of greater security can potentially benefit LAC. Mexico, for example, has positioned itself as a key hub by attracting manufacturing investment thanks to the USMCA (T-MEC) and its proximity to the U.S. market. However, there are also risks: not all countries are prepared to take advantage of these strategies. Problems related to infrastructure, energy, education and talent, or the business environment may cause potential investments to move elsewhere.
What concrete opportunities can be envisioned for Latin America? LAC is a key supplier of strategic raw materials for the global economy, which brings both advantages and challenges. This abundance of resources is its main opportunity, as it could attract foreign investment in mining and processing industries and provide the possibility of integrating into new supply chains (for example, by becoming an indispensable supplier of batteries, electric vehicles, or renewable energy technologies). However, there are also risks, such as a possible increase in dependency if local higher-value-added industries are not developed. For countries, this means the need to diversify markets and demand high ESG standards so that resource extraction does not generate social or environmental impacts that could lead to domestic instability.
In this regard, participants emphasized the need to avoid the “choose or die” dilemma—that is, the bipolarity between China and the United States—and to seek alternatives in other, less explored markets.
The experts also made recommendations for the private sector in LAC, including:
- Diversify markets and supply chains: to reduce exposure to any country or region involved in conflict. This means expanding presence across different markets (not relying exclusively on the U.S. or China, for example) and seeking multiple suppliers for critical inputs.
- Strengthen regulatory compliance: in an environment where sanctions, differentiated trade regulations, and more demanding requirements are proliferating, the private sector must reinforce its compliance capabilities. This includes ensuring adherence to export controls, adapting to local content requirements, and meeting environmental and social standards throughout supply chains. Companies must closely monitor changing regulations in order to avoid costly violations. To achieve this, it is advisable to invest in ongoing legal and international trade advisory services, update internal ethics and compliance codes to global standards, and train teams in transnational compliance.
- Implement operational resilience and risk management practices: resilience should be incorporated as a core operational pillar. This involves diversifying supply chains, as mentioned above, while also designing business continuity and contingency plans for various risk scenarios, from conflicts that affect key supplies to natural disasters exacerbated by climate change. Companies should identify critical vulnerabilities and establish redundancies, such as alternative suppliers, safety inventories for essential inputs, and flexible logistics systems capable of redirecting shipments when necessary. Investing in technologies that improve supply chain visibility (e.g., real-time shipment monitoring systems and data analytics to identify vulnerabilities) will also enable more timely responses.
The experts participating in the webinar agreed that the region can establish itself as a key and reliable player in the new global economic geography emerging from this historic transformation. At Insight LAC, we are here to support businesses and governments throughout this process.