How a Trump election victory could ruffle Latin American markets

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Investors are preparing for various scenarios in case former President Donald Trump wins back the White House in November, with a focus on Latin America.

During his previous administration, Trump had strained relations with much of the region, particularly regarding COVID-19 vaccine distribution and financial aid linked to stricter migration policies in Central America.

Investors are keenly watching how a second Trump term could impact this region.

Mexico, a key emerging market influenced by U.S. policy, presents a complex situation. Trump’s 2016 election win caused the peso to drop nearly 8% in a week.

Currently, the peso is already down 6% this year, partly due to domestic political factors. Trade is expected to be a major focus in U.S.-Mexico relations.

Trump led the revamp of the U.S.-Mexico-Canada (USMCA) trade deal, and a review is scheduled in two years.

Analysts believe Trump is unlikely to exit USMCA but may threaten to do so to secure higher tariffs and more investment in U.S. manufacturing.

Hasnain Malik, head of equity research at Tellimer in Dubai, suggests that Trump could use the threat of exiting USMCA as leverage to negotiate better terms for U.S. interests.


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