Trump’s Latin American allies face a dilemma over China, Iran war

Donald Trump is gathering his top allies from Latin America at a moment when a new US military conflict is putting even his best friends in the region under newfound pressure.

Already burdened by Washington’s efforts to blunt Chinese influence and reassert dominion over the Americas, energy importing nations like Chile and smaller countries like the Dominican Republic are now vulnerable to sudden oil price spikes thanks to the war in Iran. Currencies that had enjoyed a sunny start to 2026 have depreciated sharply as crisis-wary traders seek shelter in the dollar. 

It’s a combination that risks stoking inflation, angering price-sensitive consumers and exacerbating fiscal challenges, all while the White House leans on one country after another to spurn Beijing, the main buyer of the region’s commodities. Any ensuing economic blow is likely to leave regional leaders with even fewer resources to tackle security challenges – the focus of Trump’s “Shield of the Americas” summit in Florida this weekend.

Take Chile’s José Antonio Kast, who alongside Argentina President Javier Milei will headline a group of attendees that is also expected to include El Salvador’s Nayib Bukele, Ecuador’s Daniel Noboa, Bolivia’s Rodrigo Paz and Paraguay’s Santiago Peña. It’s not clear whether Trump’s new envoy to the bloc, former Homeland Security Secretary Kristi Noem, will join him at the gathering. Trump replaced Noem as secretary Thursday, naming Senator Markwayne Mullin as her successor. 

The arch-conservative Kast doesn’t even take office until Wednesday, and has already been dealt a double dose of reality about the difficulties of governing in the age of Trump.

Despite buoyant prices for its copper exports, the Chilean peso has been particularly hard hit by the turn in market sentiment, recording the world’s second-largest tumble since the US and Israel first attacked Iran. A weaker exchange rate is poised to fan inflation by making imports more expensive, while an extended military conflict is likely to dent global growth when Chile is already off to a slow start to the year.

Kast is also travelling north in the midst of a clash with outgoing President Gabriel Boric over a Chinese fibre-optic cable that the Trump administration has labelled a regional security threat, turning Santiago into the latest capital wondering whether its days of amicable ties with both Beijing and Washington are gone for good.

“The possibility of this so-called active non-alignment is not really feasible,” said Francisco Urdinez, director of ICLAC, a Chile-based research centre that studies Sino-Latin American relations. Chile, he added, “has learned the hard way.”

That will pose a challenge to Kast, an ambitious leader who ran on promises to reinvigorate Chile’s economy while smothering crime and expelling undocumented immigrants. His victory was the latest in a rightward shift that has left Latin America ripe with leaders who’ve gone all-in on Trump – whether pressured to or not.

“These leaders have so much to lose by getting on the wrong side of the US,” said Risa Grais-Targow, Latin America director at the Eurasia Group. At the same time, “Trump wants to reassert US influence in the region. Anything that shows that narrative appeals to him.” 

Panama revoked a Chinese contract to operate strategic ports on the canal that has served as an object of the US leader’s interest. El Salvador agreed to take US deportees. Trinidad and Tobago has provided logistical and vocal support for US military strikes on alleged drug boats. Ecuador this week expelled Cuban diplomats and conducted joint anti-drug operations with US forces. 

In Honduras, new President Nasry Asfura, who also plans to attend, won election late last year with direct backing from the US president. Then there’s Milei, the libertarian Argentine who ranks as Trump’s most enthusiastic backer. He benefitted from US financial support that helped propel his party to a landslide victory in crucial midterm elections last year.

But even before the breakout of another war, those leaders had begun to confront the difficulties of managing US demands, especially when forced to simultaneously reckon with economic realities of their nations.

Milei has taken steps to limit Chinese economic influence in Argentina in a bid to appease Trump. But he’s also toned down the harsh rhetoric he wielded as a candidate, when he referred to China’s government as an “assassin.” Recently, he praised Beijing as “a great trading partner.” 

The rhetorical softening reflects the importance of the Asian giant to so many of the region’s economies: China’s goods trade with Latin America rose more than 40-fold from 2000 to 2024, and its overall economic influence has surpassed that of the US in 14 of the region’s 33 countries since the turn of the century, according to Bloomberg Economics.

While most countries in the hemisphere will naturally align politically and economically with their northern neighbor, “you need to make clear to the US that your economic dependence with China is non-negotiable because it’s not up to you to reduce it or not in the short run,” Urdinez said. “It’s a structural issue that you cannot change whether Trump likes it or not.”

In Florida, the leaders are set to discuss cooperation on strategies to address mass migration and the fight against drug gangs – fertile ground for many of the right-wing presidents. 

But Chileans are already wary of the US pressure campaign against Beijing. A Pulso Cuidadano poll published Sunday found that 80 percent% see the submarine cable to China as somewhat or very important for development, and about half regard US visa restrictions imposed on Chilean officials over it as a violation of sovereignty.

Fallout from the war, meanwhile, could complicate Kast’s efforts to slash spending and jumpstart growth. It would come at a time when he’s promised, and Chileans expect, to move quickly, said Ramón Cavieres, executive director of research firm Activa Research, which conducted the poll.

It’s altogether a reminder that Trump’s approach to the world requires even his friendliest counterparts to deftly balance relations with Washington and their priorities at home.

“These leaders’ total loyalty to Trump is not without considerable risks,” said Michael Shifter, senior fellow at the Inter-American Dialogue. “Trump, after all, is notably mercurial and erratic. Loyalty is often a one-way street.”