The recent announcement of tariffs by former President Donald Trump, in the midst of the US election campaign, has rekindled a warning that Latin America is well aware of: the risk of becoming hostage to the power shifts of the major powers. In addition to the direct economic impacts, a political wave is beginning to form on the continent \u2014 marked by uncertainty, realignments and state opportunism.<\/p>\n\n\n\n
Whenever free trade is attacked, Latin American governments find fertile ground to justify new forms of intervention. The narrative is familiar: \u201cIf the US is closing down, we should protect our markets too.\u201d The problem is that this logic leads to multiplication of barriers<\/strong>, increase in subsidies<\/strong>, and more distortions \u2014 precisely the opposite of what fragile economies dependent on foreign investment should seek.<\/p>\n\n\n\n Capital is sensitive to instability \u2014 and protectionist rhetoric, coupled with lax fiscal policies and empty promises, creates a perfect environment for investor flight. As Friedrich Hayek pointed out, \u201cthe greater the power of the state to interfere, the greater the incentive for organized groups to seek favors.\u201d It is no coincidence that, in such periods, populist politicians gain strength with speeches of self-sufficiency and economic nationalism.<\/p>\n\n\n\n What many analysts ignore is that the cause of Latin America's vulnerability to US decisions is not in international trade<\/strong>, but rather in the lack of institutional resilience, economic freedom and political predictability<\/strong> in the countries themselves. More open economies, with clear rules and solid institutions, react better to external turbulence \u2014 because they attract investment based on merit, not patronage.<\/p>\n\n\n\n For Austrians, economic freedom is not just an instrument of efficiency\u2014it is a pillar of social and political stability. Ludwig von Mises warned that protectionism does not strengthen nations, but only preserves internal inefficiencies at the expense of consumers and innovation. Latin America needs to hear more of these voices.<\/p>\n\n\n\n The new American protectionism is a test for the continent. Some governments will take advantage of it to expand their powers. Others, perhaps a few, will see the crisis as an opportunity to reaffirm their commitments to free markets and global integration. History will show who made the right choice.Shrinking market, populism advancing<\/strong><\/h4>\n\n\n\n
The problem is not commerce \u2014 it\u2019s the state<\/strong><\/h4>\n\n\n\n
Lessons from the Austrian School<\/strong><\/h4>\n\n\n\n
\n\n\n\nConclusion:<\/h3>\n\n\n\n