Monday, April 09, 2018

Chile's Trade With China

While Donald Trump was attacking free trade in 2017, China and Chile were updating their free trade agreement, originally signed in 2005. Combined with the Trump Administration's trade war with China, we are seeing the following:

--Greater wine exports to China

--Greater, walnut, prune, and blueberry exports to China

--Greater pork exports to China (a product that does not typically come to mind for Chile)

--Oregon producers are worried about Chile increasing its blackberry exports to their detriment

--Chilean nectarine exports to China are booming

I could go on and on.

It is also worth noting that China is Chile's main trading partner. 28.5% of Chile's exports go to China, whereas the U.S. accounts for 14.1%. Meanwhile, 24.1% of Chile's exports come from China, versus 17.4% from the U.S.

It is hard to avoid the conclusion, which is now approaching conventional wisdom, that this trade war will increase China's presence in Latin America. How well Latin America and other regions make up for China's disrupted trade is unknown. Another unknown is how Latin America responds to U.S. producers trying to push into new markets after being re-routed away from China. I am sure they are scrambling right now to identify those markets.


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