China is dramatically expanding its economic footprint across Latin America through a flood of low-priced exports, particularly automobiles and e-commerce goods. This strategic pivot comes as Chinese manufacturers seek alternative markets in response to U.S. trade restrictions and domestic demand slowdown.
The world’s second-largest economy has emerged as a dominant trading partner for numerous Latin American nations, leveraging their abundant natural resources while simultaneously expanding its influence in a region historically considered within America’s sphere of influence. With exports to the United States declining by 20% last year, Chinese businesses have turned their attention to Latin America’s market of over 600 million people.
Margaret Myers, director of the Asia and Latin America program at the Inter-American Dialogue, notes: “Latin America possesses a solid middle class, relatively high purchasing power and genuine demand. These conditions create an ideal environment for China to redirect its excess industrial production.”
The influx of Chinese-made vehicles, clothing, electronics and home furnishings has generated significant economic tensions. Countries including Mexico, Chile and Brazil have implemented protective measures including tariff increases to shield their domestic industries from what they perceive as unfair competition.
E-commerce platforms Temu and Shein have accelerated market penetration, with Temu experiencing a remarkable 165% year-on-year growth in monthly active users during the first half of 2025. Chilean restaurant manager Lady Mogollon exemplifies the consumer appeal: “I use Temu consistently for clothing and household items. The identical products available in brand-name stores appear on Temu at significantly reduced prices.”
The impact on local economies has been substantial. In Mexico City, traditional retailers like lamp shop manager Ángel Ramírez report severe challenges: “The Chinese have inundated us with merchandise.” The number of shops selling Chinese-made goods in the city’s downtown has more than tripled in recent years, forcing many established Mexican stores out of business.
Argentina’s manufacturing sector, employing nearly one-fifth of the workforce, has been particularly affected. E-commerce imports—primarily from China—surged 237% in October compared to the previous year. Luciano Galfione, president of the Pro Tejer Foundation representing textile manufacturers, states: “We’re operating at historically low capacity as imports break record highs. We’re under indiscriminate assault.”
The automotive sector reveals similar patterns. Chinese automakers including BYD and GWM have made significant inroads, with over 80% of electric vehicles sold in Brazil during 2024 being Chinese brands. Mexico has become the largest destination for Chinese auto exports, receiving 625,187 vehicles last year—surpassing even Russia.
Jorge Guajardo, partner at DGA Group and former Mexican ambassador to China, explains: “In an industry where scale proves crucial, China possesses distinct comparative advantages in electric vehicles, supported by affordable pricing and substantial government backing.”
Despite growing trade deficits across the region—Mexico’s reached $120 billion in 2024—China’s economic influence continues expanding through substantial infrastructure investments and financing. According to AidData research, China provided approximately $153 billion in loans and grants to Latin America and Caribbean nations between 2014-2023, tripling U.S. contributions during the same period.
Andy Mok, senior research fellow at the Center for China and Globalization, identifies Latin America as “a cornerstone of China’s ‘Global South’ strategy aimed at countering Western influence.” This includes major projects like Peru’s $1.3 billion megaport in Chancay, which opened in 2024.
While countries are implementing protective measures—Mexico imposing tariffs up to 50% on Chinese imports, Brazil eliminating tax exemptions for low-value parcels—their leverage remains limited. Leland Lazarus, founder of Lazarus Consulting, observes: “Nations face a delicate balancing act with protectionist policies. Excessive measures could trigger Chinese retaliation, constraining their response options.”