Latin American Firms Stockpile Inventory Amid US-China Trade War Fears

Companies across Latin america, particularly in Brazil, Mexico, Argentina, and Colombia, are proactively increasing their inventories in anticipation of potential disruptions stemming from the ongoing trade tensions between the United States and China. This preemptive measure aims to mitigate the impact of possible new tariffs and global economic uncertainties, as businesses brace for a possibly volatile trade landscape.

The rush to stockpile goods reflects a broader strategy to safeguard supply chains and maintain operational stability amidst global economic headwinds. Ports are experiencing congestion reminiscent of the post-pandemic period, further incentivizing companies to act swiftly.

Inventory Surge Driven by Trade War Uncertainty

Alejandro Arroyo Welbers,Director of Programs in International Trade and Regional Economies of the Universidad Austral in Argentina,noted that companies are “launching to import everything they can” within the current 90-day window before potential tariff increases take effect. This urgency is compounded by memories of supply chain disruptions experienced during the COVID-19 pandemic, prompting businesses to prioritize inventory levels.

Did You No? …

The Drewry container index, a key indicator of global freight prices, recently surged by 41% to $3,527 per 40-foot container, underscoring the rising costs associated with international shipping.

This proactive approach is not without its challenges. Increased demand is straining logistics infrastructure, leading to higher freight prices and potential delays. The global Drewry container index has already seen a meaningful increase, reflecting the growing pressure on shipping capacity.

Country-Specific Strategies

Mexico: Leveraging T-MEC

Mexico has partially shielded itself from tariff impacts through the T-MEC trade agreement with the US and canada. However, sectors like automotive, steel, and aluminum, particularly those outside the agreement’s scope, remain vulnerable. Companies are strategically advancing exports and importing key inputs to mitigate potential tariff adjustments.

According to Mexico’s National Institute of Statistics and Geography (INEGI),exports increased by 4.5% in the first four months of 2025, while imports grew marginally by 0.6%,primarily driven by oil purchases.

Brazil: Adapting to Shifting Trade Flows

Brazil, Latin America’s largest economy, faces significant uncertainty in purchase decisions, pricing strategies, and industry planning due to the trade war. Government data from Comexstats reveals a 12.2% decrease in exports to China between January and April 2025, totaling $28.5 billion. Conversely,sales to the united States increased by 3.7%, reaching $13.1 billion, boosted by agricultural goods.

ricardo Alban, president of the National Confederation of the Brazilian Industry (CNI), emphasized that the effects of trade deviations between China and the US are still unfolding, and the scenario remains subject to rapid changes.

Argentina: Increased Reliance on Chinese imports

While Brazil remains Argentina’s primary trading partner, the country has been increasing its imports from China amidst the trade war.Imports from China grew by 77.3% in the first quarter of 2025 compared to the same period in 2024, according to the Argentine Chamber of Commerce (CAC). This growth spans consumer goods and capital goods, reflecting China’s growing influence in Latin America.

The CAC also noted that economic growth, a stronger local currency, and the easing of trade restrictions have contributed to the increase in imports from China and other countries.

Colombia: Anticipating the Christmas Season

In Colombia, companies are anticipating the Christmas season by increasing orders during the 90-day tariff pause, according to javier Díaz, president of Analdex. This proactive approach aims to avoid potential high tariffs if no trade agreement is reached after the pause.

Last March, imports in Colombia totaled $5,543.1 million CIF (including cost, insurance, and freight), a 16.5% increase compared to March 2024.

Logistical Challenges and Rising Costs

The surge in import activity is placing significant strain on logistics infrastructure across Latin America. ports are congested, freight prices are rising, and delays are becoming more frequent. In air transport, capacity is expected to be a challenge in 2025, driven by e-commerce growth and direct-to-consumer models, while delays persist in aircraft deliveries.

Land transport also faces challenges, with logistics and multimodal infrastructure deficiencies contributing to high costs, potentially reaching 22% of product value, considerably above the OECD average of 8%, according to the National Association of Foreign Trade of Colombia (Analdex).

Pro Tip: Companies should diversify their supply chains and explore alternative sourcing options to mitigate risks associated with the US-China trade war.

Inventory Levels Decline in Mexico

According to the logistics consultant MTM Logix, internal consumption in Mexico has remained relatively stable, but some business sectors have experienced inventory breaks due to commercial shocks. This is attributed to increased uncertainty, new rates, and higher costs for importing key supplies, particularly from Asia.

Mario Verraldo, CEO of MTM Logix, noted that the average inventory of companies in Mexico has fallen from 60 days to 45 days. Additionally, container freight rates on the China-Mexico route have risen to around $3,000, compared to an average of $1,600 at the beginning of the year.

The DHL Trade Atlas 2025 report indicates that world trade has been surprisingly resilient despite recent disruptions and is expected to grow at an annual rate of 3.1% between 2024 and 2029,driven by Asia,despite tariff measures.

What strategies are Latin American businesses employing to navigate the complexities of the US-China trade war? How can governments in the region support businesses in mitigating the impact of these global trade tensions?