Age of Agility: Key Themes Shaping Latin America in 2026

Latin America’s economic outlook for 2026 is likely to be heavily influenced by the ongoing global trade disputes and recalibrating relations with the region’s main trading partners, the US and mainland China. The new trade realities are likely to drive the region’s approach to trade, security, critical minerals, and AI and technology. US engagement is forecast to deepen ties around security and the development of energy and critical minerals resources.

• Latin American countries will continue tariff negotiations with the US while simultaneously pursuing trade diversification, although this is likely to have a limited impact within 2026. 
• Countries such as Ecuador, El Salvador, Guatemala and Mexico are likely to increase cooperation with the US on security and intelligence, but regional support for additional US airstrikes or ground operations on Venezuela remains unlikely. 
• Growth in Latin America will likely be modest, as in 2025. Gradual further moderation of inflation will constrain capacity for more rate cuts for most Latin American countries, while Brazil will likely begin its easing cycle in 2026.
• The US is likely to seek to facilitate cross-border data flows and reduce barriers against US digital firms in Latin America, while technological infrastructure development is likely to become emerging policy and investment drivers.
• Incoming right-wing governments will seek to reduce state intervention, implement deregulation and tax cuts, and streamline permit procedures. Protest risks will increase if new governments scale back social welfare spending. Enhanced security deployments to combat illegal migration and crime will also be a priority.

The US ranks among the top three trading partners for most Latin American countries, highlighting the importance for governments to limit the impact of US tariffs on the Latin American economy. As of mid-December 2025, Argentina, Ecuador, El Salvador and Guatemala had secured framework agreements with the US. Other countries will keep negotiating in 2026, with outcomes likely to include the removal of the region’s tariffs or perceived nontariff barriers to US exports in exchange for reduced US tariffs. 

Uncertainty over tariffs will persist through 2026 as the region’s two largest economies, Brazil and Mexico, continue their trade negotiations with the US. Brazil, initially subject to a 50% tariff, has had them partially waived — for coffee, meat and soft commodities — and will work toward expanding the waiver to more exports, particularly manufactured goods. 

The United States-Mexico-Canada Agreement (USMCA) review due in mid-2026 is likely to be the main trade development in the region. If completed, the revised version is likely to incorporate stricter rules of origin, aiming to bring more segments of the supply chain into North America, along with a more coordinated tariff policy toward third-party countries, and expanded investment screening on national security grounds, particularly for strategic sectors such as automotives.

Most countries within the region are likely to seek to diversify export markets in 2026, although with limited impact. Despite the rising cost from tariffs, S&P Global Market Intelligence data does not indicate a declining trend in regional exports to the US, except for Brazil where exports to the US fell by 28% between August and October 2025.

The Trump administration’s 2025 National Security Strategy stresses that the US should reorient its foreign policy away from traditional power centers like Asia and Europe and more toward becoming the predominant force in the Western Hemisphere, especially in reducing immigration, impeding the trade of illegal narcotics and countering the influence of mainland China regionally. 

The US apprehension of Venezuelan President Nicolás Maduro, alongside Trump’s public comments and military postures, demonstrate the Trump administration’s commitment to this security strategy, and that increases political and security risks of some foreign key actors. The US government has said its priority will be rebuilding Venezuelan oil production, US-bound exports and reestablishing a primary role for US companies in the sector. If the US perceives that Venezuela is unwilling to comply with its requests, renewed US military action in Venezuela is highly likely.

As the US focuses on security and curbing drug trafficking, cooperation is likely to remain strong with Ecuador, El Salvador, Guatemala and Mexico to combat criminal gangs, including intelligence sharing and curbing migration. The Trump administration is also likely to continue signaling its preferences for ideologically aligned candidates in the region’s elections, offering rhetorical support for their campaigns and openly suggesting that the US would be more inclined to offer trade and other economic incentives if they come to power, as seen in Argentina and Honduras during 2025. 

Critical minerals access and investments are likely to feature prominently in ongoing tariff and trade negotiations, with Argentina, Chile, Peru and Brazil offering increased opportunities for US firms. For example, the November 2025 US-Argentina framework agreement lowers trade barriers, aligns regulatory standards and facilitates US investment in Argentina’s lithium sector, where mainland Chinese capital remains prominent.

Latin American countries are likely to work toward adapting global AI and technology infrastructure and frameworks to domestic realities, as the US and mainland China seek digital allies.

Driven by strong data protection laws and a dedicated regulator, Brazil is the country advancing the fastest in data sovereignty and data centers. Other countries also likely to prioritize increasing private investment into data centers and offer investment incentives and tax exceptions are Colombia, Chile and Mexico.

However, data center growth will also intensify energy constraints and increase water usage, with the latter particularly presenting difficulties in drought-prone areas, such as Mexico’s Querétaro, heightening risks of legal challenges and unrest against new projects.

Driven by increased focus on economic growth and combating crime, new right-wing governments are coming into power. Incumbents, who seek to reduce the state’s role, including President Milei (Argentina), President Nayib Bukele (El Salvador) and President Daniel Noboa (Ecuador) will be joined by newly elected or inaugurated President Rodrigo Paz (Bolivia), President-elect José Antonio Kast (Chile), and Nasry Asfura (Honduras).

Costa Rica, Peru, Colombia and Brazil have scheduled elections in 2026, with right-wing and center-right parties polling ahead in Costa Rica and Peru. In Brazil, President Luiz Inácio Lula da Silva is likely to seek reelection, while the opposition is yet to finalize its candidate.

New or recently elected governments are likely to shift policy focus from a social agenda toward prioritizing economic growth through deregulation, spending cuts, tax reductions and investment incentives in strategic sectors, such as energy, mining and infrastructure. These shifts will play a decisive role in shaping the long-term Latin America economic outlook. Public security has become a pressing concern following years of expansion of international criminal gangs, and right-wing parties also are likely to seek increased security deployments, particularly at borders, migration controls and potentially states of emergency.

—With contributions from Tomas Baioni, Sofia Iotti, Joao Machado