Trump and Latin America 2026: Tariffs, the Maduro Capture, and the New Monroe Doctrine

RioTimes Deep Analysis | Series: Trump US-Latin America Policy Guide

President Donald Trump’s second term has produced the most assertive U.S. posture toward Latin America since the Cold War. Branded by analysts as the “Donroe Doctrine,” the administration has combined tariffs, sanctions, military force, and dealmaking to reshape hemispheric order, creating a forced binary for regional governments: align with Washington or face consequences.

The Tariff Architecture

Trump’s April 2, 2025 “Liberation Day” executive order imposed reciprocal tariffs on roughly 185 countries. Most of Latin America received the baseline 10% rate, while Guyana faced 38% and Nicaragua 18%. Mexico was excluded but remained subject to separate 25% tariffs on goods not compliant with the USMCA trade agreement.

The tariff escalation intensified through 2025. In March, all existing Section 232 agreements suspending steel and aluminum tariffs with Brazil, Argentina, Mexico, Canada, and others were terminated. By June, Section 232 rates on commodity metals reached 50%. In July 2025, Trump imposed a punitive 50% tariff on Brazilian goods, framed as retaliation for the BRICS summit in Rio de Janeiro and the Bolsonaro prosecution.

The April 2026 Section 232 overhaul introduced a tiered structure: 50% on commodity metals, 25% on derivatives, and 15% on metal-intensive equipment, all now calculated on the full customs value of products rather than just the metal content. Mexico’s Bank of Mexico cut its 2025 GDP forecast to 0.6% from 1.4% under the combined pressure.

Diplomatic Realignment Across the Region

Trump’s 2025 National Security Strategy codified what analysts call the “Trump Corollary” to the Monroe Doctrine: the Western Hemisphere must be controlled by the U.S. “politically, economically, commercially, and militarily,” with China as the primary adversary to be excluded. This has created a loyalty test across the region, where cooperation on deportations, drug enforcement, and China de-coupling earns rewards while resistance triggers tariffs.

Brazil: From Hostility to Rapprochement

The Trump-Lula relationship transformed dramatically. After imposing 50% tariffs and sanctioning a Brazilian Supreme Court justice in July 2025, Trump reversed course following Bolsonaro’s conviction and sentencing to 27 years. A warm encounter at the UN General Assembly in September led to phone calls in October and December, with Trump posting that they had “set the stage for very good dialogue.” By March 2026, the U.S. had locked a $565 million deal with Brazil’s only operating rare earth mine, driven by Brazil’s position holding the world’s second-largest rare earth reserves.

Argentina: The Model Ally

President Milei became Trump’s closest partner in the hemisphere. After 14 U.S. visits, Trump rewarded Argentina with a $20 billion currency stabilization package, explicitly warning that if Milei’s coalition lost the October 2025 midterms, the U.S. “will not be generous.” Milei won, and a bilateral trade agreement is nearly finalized. Argentina is also positioned as a potential site for Latin America’s first Stargate AI data center.

Mexico: Quiet Diplomacy Under Pressure

President Sheinbaum adopted the most restrained response of any major Latin American leader: verifiable action on cartels and migration in exchange for tariff forbearance, without public confrontation. Mexico extradited 55 cartel figures, accepted roughly 13,000 third-country deportees, and raised tariffs on Chinese-made cars from 20% to 50%. The USMCA formal review launched in early 2026 with a July 1 deadline, and the U.S. Trade Representative has signaled reluctance to recommend full renewal without changes to rules of origin and auto sector content requirements.

Venezuela: The Maduro Capture

On January 3, 2026, U.S. forces launched Operation Absolute Resolve, capturing President Maduro in a surprise raid on Caracas involving 150 aircraft. Maduro was arraigned in Manhattan federal court on narcoterrorism charges. The administration outlined a three-phase plan for Venezuela: stabilization, recovery, and democratic transition. By March, as the Iran crisis threatened global oil supply, the U.S. eased Venezuela oil sanctions to permit PDVSA sales to American companies, prioritizing energy security over democratic conditions.

The Iran War and Latin America’s Energy Windfall

The collapse of U.S.-Iran nuclear talks in February 2026, followed by military strikes and Iran’s closure of the Strait of Hormuz, sent shockwaves through Latin American economies. Brent crude surged from $72 in late February to nearly $128 per barrel by early April, a 55% monthly gain the IEA called the largest in market history. Hormuz throughput collapsed 95%, from 129 vessels per day to just 7.

Brazil emerged as a short-term winner. As the world’s sixth-largest oil exporter, every sustained $1 per barrel increase adds roughly 1% of GDP in government revenue. The Ibovespa closed Q1 2026 up 16.35% with R$48 billion in foreign inflows, and the real strengthened to near 5.15 per dollar. But the gains came with a catch: Brazil imports 41% of its urea through the Strait of Hormuz, and fertilizer prices surged 35% in March, threatening the agricultural sector that underpins the broader economy.

Central America and the Caribbean are the clear losers. As pure fuel-importing economies, they face higher import bills, currency depreciation, and food inflation with no commodity windfall to offset the damage. Shipping rerouted around the Cape of Good Hope adds 10 to 14 days to trade lanes. The crisis accelerated Latin America’s strategic importance as a non-OPEC supply source, with 700,000 to 800,000 barrels per day of new output expected from Brazil, Guyana, and Argentina in 2026.

Migration: Record Lows and Paradoxes

Border apprehensions have dropped to the lowest monthly average since 1966. In FY2026, Border Patrol is averaging 6,897 apprehensions per month, down from a peak of over 200,000 per month during the Biden era. Total CBP encounters in FY2025 fell 79% compared to FY2024.

The deportation numbers reveal a paradox. Despite aggressive rhetoric, the Trump administration deported roughly 144,000 Mexicans in 2025, about half the Biden-era annual figure of 300,000. The key difference is in targeting: Biden’s removals were mostly border-zone apprehensions, while Trump’s are increasingly interior-based, affecting long-settled immigrants. ICE is averaging over 1,100 arrests per day in interior operations, with a detention capacity of 68,000 and a non-detained docket of over 7 million.

The Colombia deportation crisis of January 2025 set the template for the entire region. When President Petro refused military deportation flights, Trump threatened 25% to 50% tariffs within hours and Colombia capitulated. The message was clear: cooperation on deportations is mandatory. The U.S. has since signed asylum cooperation or safe third country agreements with Belize, Costa Rica, Ecuador, Guatemala, Honduras, Panama, Paraguay, and El Salvador.

The US-China Battle for Latin America

China is the largest trading partner for most Latin American countries, and the Trump administration has drawn explicit red lines. A senior U.S. official told regional governments: “What you cannot do is develop infrastructure or work in high-tech projects, digital connectivity, and so on, with China. Those are red lines.” Washington backed this with travel bans on Chilean officials over a Chinese fiber optic cable project and pressure on Peru over the Chinese-built Port of Chancay.

The U.S. has committed over $1 billion in critical mineral investments across the region. Vice President Vance launched the Americas Critical Minerals Alliance, targeting Brazil’s rare earth reserves (23.3% of global deposits) and Argentina’s lithium. But China is not retreating. BYD shipped 130,451 vehicles to Mexico and 119,917 to Brazil in 2025, making them its top two global export destinations. The first BYD electric vehicle manufactured in Latin America rolled off the line at BYD’s Camaçari factory in Bahia on July 1, 2025.

Most regional governments are pursuing what analysts call a “sovereign dual-track” approach: courting U.S. strategic investment while keeping the door open to Chinese capital, particularly for processing capacity where China controls over 90% of global rare earth refining. Brazil’s BRICS engagement and Mercosur’s expansion toward South-South partnerships reflect this balancing act.

Election Implications Across the Hemisphere

Trump’s influence on regional elections has produced mixed results. In Argentina, explicit backing and a $20 billion financial package helped Milei’s coalition win the October 2025 midterms. In Honduras, Trump endorsed the National Party’s candidate and pardoned convicted ex-president Juan Orlando Hernandez before the vote. In Costa Rica, a pro-Trump conservative won the presidency in February 2026.

But in Peru, the most explicitly pro-Trump candidate collapsed to 7% in polls, and in Brazil, Trump’s pressure campaign to protect Bolsonaro largely strengthened Lula politically. The October 4 Brazilian election is now a statistical tie between Lula and Flavio Bolsonaro, with Polymarket showing roughly 40% each. Colombia’s May 31 presidential first round will test whether the Trump-Petro rapprochement helps or hurts the governing coalition’s candidate.

The emerging pattern is clear: right-leaning governments are moving closer to Washington on security and China de-coupling, left-leaning governments are deepening ties with Beijing and exploring progressive regional alliances like the Mexico-Brazil-Colombia axis, and centrist governments are navigating case by case. The Trump brand as an endorsement has limited electoral value in a region where the Monroe Doctrine and the Iran War have not enhanced American popularity.

What to Watch

• The USMCA formal review deadline on July 1, 2026, which could reshape North American trade if the U.S. declines renewal
• Colombia’s presidential first round on May 31 and Brazil’s October 4 election as tests of Trump’s regional influence
• The Iran ceasefire’s stability and its effect on oil prices that are driving Latin America’s commodity windfall
• Venezuela’s transition timeline and whether U.S.-controlled oil revenue translates into democratic elections
• The critical minerals race between Washington and Beijing for access to Brazil’s rare earths, Argentina’s lithium, and Chile’s copper

This article is part of The Rio Times’ guide series, offering in-depth analysis for investors, expats, and analysts tracking Latin America. This article does not constitute investment advice.

Read More from The Rio Times

• Lula Government 2026: Approval Crisis, Election Race, and Brazil’s Balancing Act
• Chile Economy 2026: Kast, Copper, and the Path Forward
• Oil and Energy in Latin America 2026: The Complete Guide