Cheap Chinese exports swamp Latin America, putting local industry under strain

China is flooding Latin American markets with low-priced exports as its companies seek new customers amid weak domestic demand and higher trade barriers in the United States, putting increasing pressure on local industries across the region.

As US President Donald Trump’s tariffs reduce Chinese access to the American market, exporters have turned to Latin America, a region of more than 600 million people with rising consumption and relatively strong purchasing power.

China has become one of the region’s most important trading partners, supplying cars, clothing, electronics and e-commerce goods while deepening its political and economic influence in what Washington has traditionally viewed as its strategic backyard.

“Latin America has a solid middle class and real demand,” said Margaret Myers, director of the Asia and Latin America programme at the Inter-American Dialogue. “That makes it one of the easiest places for China to offload excess industrial production.”

Local producers feel the squeeze

The surge of Chinese imports has alarmed governments and manufacturers trying to build competitive domestic industries. Countries including Mexico, Chile and Brazil have raised tariffs or tightened trade rules to protect local producers.

In downtown Mexico City, shops selling Chinese-made goods have multiplied in recent years, undercutting long-established businesses. Local retailers say they struggle to compete on price as cheap imports dominate the market.

Similar pressure is being felt in Argentina, where factory closures and job losses are mounting. Government data show e-commerce imports, largely from China, jumped more than 200% year on year in late 2025.

“We’re operating at historically low capacity as imports hit record highs,” said Luciano Galfione, head of Argentina’s Pro Tejer Foundation, which represents textile manufacturers.

E-commerce accelerates the trend

Online platforms have played a central role in expanding China’s reach. Chinese e-commerce giants Temu and Shein have rapidly grown their user bases across Latin America, offering low-cost goods directly to consumers.

Market data show Temu averaged more than 110 million monthly active users in the region in the first half of 2025, while Shein also recorded steady growth.

For consumers, the affordability is attractive. For local businesses, it has intensified competition and squeezed margins.

Temu said it provides Latin American businesses with access to a low-cost online sales channel, including opening its marketplace to domestic sellers in Mexico and Brazil. Shein said it respects fair competition and the role of local industries.

Chinese cars reshape regional markets

The impact extends beyond retail goods. Chinese carmakers are making significant inroads into Latin America’s auto markets, particularly in Brazil and Mexico.

Chinese brands accounted for more than 80% of electric vehicles sold in Brazil in 2024, according to industry data. Mexico has become the largest destination for Chinese vehicle exports, surpassing Russia last year.

While affordable Chinese vehicles appeal to consumers, they pose a challenge for domestic auto industries that employ millions of workers across the region.

Trade deficits and growing dependence

Many Latin American countries are running widening trade deficits with China, importing manufactured goods while exporting mainly raw materials such as copper, lithium, soya and fishmeal.

China has also become the region’s largest source of official financing, providing loans and grants far exceeding those from the United States, according to research data.

Major infrastructure projects, including ports, dams and energy facilities, have further deepened economic ties.

Governments weigh their options

Some governments are beginning to push back. Mexico has imposed tariffs of up to 50% on certain Chinese imports. Brazil and Chile have moved to reduce tax exemptions on low-value overseas parcels and raise tariffs on electric vehicles.

However, analysts warn that countries face limits in how far they can go.

“There’s a balancing act,” said trade consultant Leland Lazarus. “If governments push too hard, they risk retaliation from China. Their leverage has clear limits.”

For now, Latin America remains caught between the benefits of cheap imports for consumers and the growing strain on local industries struggling to compete.