Flooded by cheap Chinese goods, Latin America is fighting back to
protect its industries
[February 02, 2026] By
CHAN HO-HIM, ISABEL DEBRE, NAYARA BATSCHKE and FABIOLA SÁNCHEZ
HONG KONG (AP) — China has been flooding Latin American markets with
low-priced exports, especially autos and e-commerce goods, as its
exporters adjust to U.S. President Donald Trump's tariffs and
geopolitical moves.
The world’s second-largest economy has become a major trading partner
for many Latin American nations, seeking access to their abundant
natural resources and growing markets while expanding its influence in a
region Trump views as America’s Backyard.
Chinese businesses face slow demand at home. They need new markets for
their products as the country ramps up production in many industries.
Exports to Latin America, a market of more than 600 million people, and
other regions have climbed while exports to the U.S. fell by 20% last
year.
“Latin America has a solid middle class, relatively high purchasing
power and real demand,” said Margaret Myers, director of the Asia and
Latin America program at the Inter-American Dialogue think tank in
Washington. “Those conditions make it one of the easiest places for
China to offload its excess industrial production.”
The influx of made-in-China cars, clothing, electronics and home
furnishings has rankled countries trying to build their own globally
competitive industries. Some, such as Mexico, Chile and Brazil, have
raised tariffs or taken other measures to protect their local
industries.
Cheap e-commerce goods gain market share
Cheap goods from China are welcome news for many Latin American
consumers, but they’re a headache for local businesses.
Chinese e-commerce platforms, led by Temu and Shein, have accelerated
that trend.
“I use Temu all the time, whether to buy clothes or household items. The
same things I would find in brand-name stores or shopping malls, I find
on Temu at a much lower price,” said Chilean restaurant manager Lady
Mogollon.
Temu averaged 114 million monthly active users in Latin America in the
first half of 2025, a 165% increase year-on-year from 2024, market
intelligence company Sensor Tower estimates. Shein’s monthly active
users in the region grew 18%.
It's not just online shopping.
T-shirts, jackets, pants, toys, watches and furniture and more products
made in China fill the stalls of street vendors in downtown Mexico City.
Ángel Ramírez, manager of a downtown lamp shop, is struggling to
compete.
“The Chinese have invaded us in terms of merchandise,” said Ramírez,
sitting behind the counter of his completely deserted store.
Over the past few years the number of shops selling Chinese-made goods
in Mexico City ’s downtown has more than tripled, Ramírez said, in some
cases putting long-established Mexican stores out of business.
Jobs are being lost to imports
Argentina is bearing much of the brunt of rising Chinese imports, as
local factories shut down and lay off workers in a manufacturing sector
that employs almost a fifth of its workforce.
The volume of e-commerce imports -- mostly from China -- soared 237% in
October from the same month a year earlier, Argentine government
statistics show.
“We’re operating at historically low capacity as imports break record
highs,” said Luciano Galfione, president of the nonprofit Pro Tejer
Foundation, which represents textile manufactures. “We’re under
indiscriminate attack.”
“The number of Chinese products arriving in Argentina, this ultra-fast
fashion, is deeply worrying,” said Claudio Drescher, head of the chamber
of industry and owner of the Buenos Aires-born Jazmín Chebar clothing
brand. “It’s an international phenomenon but it’s now really beginning
to have dramatic importance here.”
A Temu spokesperson said it has been giving Latin America local
businesses “access to a low-cost, scalable online channel that was
previously out of reach for many of them”, including the opening of its
marketplace to domestic sellers in Mexico and Brazil in 2025.
Shein said in a statement that the company “respects the importance of
local industries and fair competition.” It would not comment on broader
trade policy debates.
Chinese autos make inroads in Brazil and Mexico
Mexico and Brazil -- Latin America’s regional auto manufacturing centers
-- also are under pressure from rising imports of low-priced Chinese
cars.
Chinese automakers such as BYD and GWM see huge growth opportunities in
Latin America. More than 80% of the 61,615 EVs sold in 2024 in Brazil,
the world's sixth-largest auto market, were Chinese brands, according to
the Brazilian Association of Electric Vehicles.
Mexico has become the largest destination for Chinese auto exports,
importing 625,187 vehicles last year, according to the China Passenger
Car Association, surpassing Russia's imports.
Both Brazil and Mexico already have their own robust auto industries.
Mexico, as a base for major global manufacturers, is estimated to be the
world’s seventh-largest auto producer, though about 3.4 million of the
nearly 4 million vehicles it made last year were exported. Brazil turned
out about 2.6 million vehicles, including many EVs and hybrids. That
compared with China’s output of 34.5 million vehicles, including more
than 7 million exported overseas.
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Clothing imported from China is on display for sale at a store in
Quito, Ecuador, Saturday, Jan. 31, 2026. (AP Photo/Dolores Ochoa)
 In an industry where scale is vital,
“China does have a comparative advantage on EVs,” with affordable
prices and massive government support, said Jorge Guajardo, a
partner at the consultancy DGA Group and a former Mexican ambassador
to China.
Affordable Chinese cars appeal to many drivers and will continue to
make inroads in Latin America, said Paul Gong, head of China Autos
Research for the Swiss bank UBS.
Chinese automakers also are investing in local production. BYD and
GWM are building factories in Brazil to expand capacity in the
region, potentially creating hundreds if not thousands of jobs. Last
year, however, Brazilian prosecutors sued BYD over allegations of
poor labor conditions for workers, which the company denied.
Commodity-rich Latin America has limited leverage on China
China needs Latin America's vast natural resources for its hungry
industries, from lithium in Brazil to copper in Chile and fishmeal
in Peru. But trade deficits with China are growing across the
region.
For some nations, “China just sells, they don’t buy,” said Guajardo.
Mexico’s deficit with China, its second largest trading partner
after the U.S., reached $120 billion in 2024, with exports of those
including raw materials such as copper and its concentrates,
electrical and electronic equipment and agricultural goods totaling
only about $9 billion.
Argentina’s trade deficit with China rose to nearly $8.2 billion in
2025, fueled by imports of more items such as electrical machinery
and equipment and manufactured goods than its exports including of
raw materials such as soybean and meat.
Brazil recorded an about $29 billion trade surplus with China last
year, according to Brazilian official data. That's partly due to
surging exports of soybeans after Beijing paused its purchases of
U.S.-grown soy. Chile runs a surplus with China thanks to its
exports of copper, lithium, fruits and wine.
In most cases, China exports mostly manufactured goods and imports
raw materials. But the relationship goes far beyond those basics.
China provided loans and grants to countries in Latin America and
the Caribbean in 2014-2023 worth roughly $153 billion -- the largest
source of official sector financing for the region -- compared to
approximately $50.7 billion that the U.S. provided, according to
AidData, a research lab at William & Mary, a public university in
Virginia.
That means for every dollar donated or lent by Washington, Beijing
provides $3.
Latin America is a pillar of China’s “Global South” strategy of
countering Western influence, said Andy Mok, a senior research
fellow at the Center for China and Globalization.
China financed a $1.3 billion megaport in Peru’s Chancay, which
opened in 2024 that may eventually connect by a planned railway with
Brazil's coasts on the Atlantic.
State-backed Chinese companies also have made massive investments in
dams, mines and other infrastructure across the region.
“There may be deep concern about competitiveness, but politically,
many countries don’t feel they have the space to resist China’s
export surge,” said Meyers from the Inter-American Dialogue think
tank. “The relationship has become too important economically.”
Still, some countries are pushing back against Chinese imports
Mexico has long sought to protect local industries, imposing tariffs
of up to 50% on imports from China, including automotive products,
appliances and clothing.
Brazil is among the countries eliminating or phasing out “de minimis”
import tax exemptions for overseas parcels costing less than $50, in
part to target cheap imports from China. It's also increasing
tariffs on EV imports. Other countries may follow suit, as some
analysts expect more protectionist measures including tariffs and
stiffer regulations coming out of Latin America.
Chile has raised tariffs and imposed a 19% value-added tax on
low-value parcels.
Given China's growing leverage, though, countries face a "balancing
act when it comes to protectionist policies," said Leland Lazarus,
founder of Lazarus Consulting, which focuses on China-Latin America
relations.
“They can’t go too far, or China may retaliate in kind,” he said.
“So, their leverage has a limit.”
___
DeBre reported from Buenos Aires, Argentina. Batschke reported from
Santiago, Chile. Sánchez reported from Mexico City. AP journalists
Didi Tang in Washington, Gabriela Sá Pessoa and Tatiana Pollastri in
Sao Paulo, Brazil and Megan Janetsky in Mexico City also
contributed.
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