From Lula’s Brazil to Sheinbaum’s Mexico to Milei’s Argentina, Latin America is writing its own script between Washington and Beijing.
Published 14 October 2026 · 06:00 GMT
Latin America has spent two centuries being someone else backyard. First Spain and Portugal, then Britain, then the United States, each treated the region as a source of raw materials and a market for finished goods. The twenty-first century changed the cast. China became the largest trading partner of several South American countries, buying soy, copper, iron ore, and oil on a scale no one had seen. Latin America discovered it had options, and it has been using them ever since.
The shift is not ideological, whatever the speeches say. Left-wing governments in Brasilia and Bogota and right-wing governments in Buenos Aires and Quito have all made the same calculation: the region sells commodities to the world, and the buyer who pays most sets the terms. When Washington offered lectures and Beijing offered loans and ports, the choice was not hard. Latin American foreign policy today is best understood as a long negotiation for better terms with everyone.
Nearshoring has added a new chapter. As the United States sought to reduce its dependence on Chinese manufacturing, Mexico became the obvious alternative: close, connected by the USMCA trade agreement, and full of workers. Factories moved north in Mexico, investment followed, and Mexico overtook China as the largest exporter to the United States. The Mexican boom is the most concrete economic story in the region, and it has changed the politics of the US-Mexico relationship along with it.
The region also carries the world’s biggest burdens. Latin America is the most violent region on earth by homicide rates, driven by drug trafficking, organised crime, and weak institutions. Migration northward, through the Darien Gap and across Mexico, has become one of the defining political issues in the United States. And the Amazon rainforest, which sits mostly in Brazil, is a global climate asset whose fate is decided in Brasilia. The region’s problems are the world problems, and the world is finally noticing.
Brasilia bet on Lula. The veteran president returned to office in 2023 promising to rebuild Brazil institutions, protect the Amazon, and restore the country global standing. Deforestation in the Amazon fell in his first years, after surging under his predecessor. Lula has also pushed for a stronger Global South voice, hosting summits and arguing that the world order underrepresents the developing world. His bet is that Brazil can be both a commodity power and a climate leader, and that the two roles reinforce each other.
Mexico City bet on continuity with a difference. Sheinbaum, a climate scientist by training and the successor to Andres Manuel Lopez Obrador, took office in 2024 promising to continue her predecessor social programmes while managing the security crisis and the US relationship with a steadier hand. Her government faces the hardest arithmetic in the region: a fiscal deficit, a state oil company in debt, and a northern neighbour whose politics can turn hostile overnight. Her bet is that competence and calm can succeed where drama failed.
Buenos Aires bet on shock. Milei, an economist who campaigned with a chainsaw, took office in December 2023 and cut public spending with a speed that stunned even his supporters. Inflation, which had been running at rates that made the peso a joke, came down sharply. Poverty rose first, then began to ease. His bet is the oldest in the Argentine playbook and the riskiest: that pain now buys stability later. Argentina has tried shock therapy before. The question is whether this time the politics hold long enough for the economics to work.
Three capitals, three bets, and no regional leader. Latin America has not produced a single dominant voice since the days of Lula’s first presidency, and the fragmentation is part of the story. Each country negotiates alone with Washington and Beijing, and each gets the terms its size allows. The region’s dream of unity, from Bolivar onward, keeps colliding with the reality of 33 sovereignties.
The alphabet soup of Latin American integration is long: Mercosur, the Pacific Alliance, CELAC, the Andean Community, ALBA, UNASUR. Each was launched with a summit and a declaration. Each has faded or stalled. Mercosur, the oldest and most serious, has spent decades negotiating internal tariffs and external deals, and its members still trade more with the outside world than with each other. The gap between the rhetoric of integration and the reality of trade is the region longest-running joke.
The Mercosur-EU deal is the test case. Negotiations ran for a quarter of a century, and a deal was concluded in principle in December 2024, promising to create one of the world’s largest free trade areas. European farmers objected, South American governments argued about safeguards, and ratification has dragged. The deal would matter enormously for both sides: European machinery and chemicals for South American beef, soy, and minerals. Its fate is a measure of whether either side can still do big trade deals at all.
CELAC, the Community of Latin American and Caribbean States, exists largely to exclude the United States and Canada from the room. It has produced declarations on everything and binding commitments on little. The Pacific Alliance, linking Mexico, Colombia, Peru, and Chile, is more businesslike, but its members have drifted apart politically. The pattern is consistent: Latin America agrees on the idea of unity and disagrees on every practical step toward it.
The deeper truth is that Latin America does not need another bloc. It needs infrastructure: roads across the Andes, ports on the Pacific, railways through the Amazon basin, and power grids that connect rather than divide. Chinese finance has funded some of it, and the United States has promised some of it. The country that builds the region physical connections will shape its politics more than any summit declaration. So far, nobody has built enough.
The Western lens reads Latin America as a contest for influence: Washington trying to hold its hemisphere, Beijing buying in with trade and loans, and the region playing both sides. In this telling, the danger is that the contest becomes a new Cold War fought in someone else backyard.
From the East, Latin America looks like a supplier with leverage. China needs its soy, copper, and lithium, and it pays for them without lectures on governance. In this telling, the region is not a battleground but a market, and the country that offers the best terms wins.
From the Global South, Latin America is the mirror. A region of middle-income countries, rich in resources and talent, that has never converted its wealth into power. In this telling, the question is not who wins Latin America, but whether Latin America ever wins for itself.
