A new wave of U.S. tariffs and a slowdown in China’s economy now threaten to drag down Peru’s growth, according to recent statements from Peru’s central bank and detailed economic analysis.
The U.S. has imposed a 10% tariff on about 70% of Peruvian exports, while China faces a base 10% tariff and an additional 145% levy from the U.S. These measures have already started to reshape global trade flows and unsettle commodity markets.
Peru’s economy, which shrank by 0.4% in 2023, rebounded with a 3.3% expansion last year and is projected to grow by about 4% in 2025. This would place Peru among the fastest-growing economies in Latin America.
However, officials and analysts warn that the combined impact of U.S. tariffs and China’s decelerating growth could erode these gains. The central bank’s chief economist, Adrian Armas, describes the tariff impact as moderate for now, but acknowledges that ongoing uncertainty clouds the outlook.
China absorbs 30% of Peru’s exports, with 70% of Peru’s copper shipments going to China. This heavy reliance on mineral exports creates a vulnerability: if China’s demand falls, Peru has few alternative markets.
The Free Trade Agreement signed in 2009 intensified this dependency, with Peru’s exports to China jumping from $5.5 billion in 2010 to $23 billion in recent years.
In contrast, value-added sectors like textiles and agriculture make up less than 5% of exports to China, while they account for over 50% of exports to the U.S. and EU.
Recent forecasts paint a challenging picture for China. Moody’s projects China’s GDP growth will slow to 3.8% in 2025, well below the official 5% target. J.P. Morgan expects a 0.7 percentage point drag on China’s growth due to tariffs, with global recession odds at 60%.
Peru Faces Rising Trade Risks Amid U.S.-China Tensions
China’s export sector, which drove much of its recent growth, now faces declining U.S. demand and barriers to redirecting shipments elsewhere. The U.S.-China trade war has also complicated Peru’s inflation outlook and raised the risk of a global recession.
BBVA Research estimates that a universal 10% U.S. tariff could reduce Peru’s exports by $61 million, while reciprocal tariffs could cut exports by $760 million, or 0.26% of GDP.
The impact on investment decisions and business confidence remains uncertain, as tariff measures have not been fully implemented. Peru’s government and business leaders are exploring ways to diversify export markets and reduce exposure to external shocks.
However, the country’s economic fortunes remain closely tied to the evolving trade dynamics between the world’s two largest economies. As U.S. and Chinese policies continue to shift, Peru faces a delicate balancing act to sustain growth and protect its key industries.
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