Economic Challenges Facing Latin America
By Emna Coigny | 20th of November, 2025 | 4 min
When studying economic challenges worldwide, we often lose ourselves hyper-fixating on places like the United States, China, and Europe, but what about Latin America? Even though this region accounts for 8% of the global population, we tend to overlook its relevance to the ever-changing nature of our economic world. So, what are the economic challenges populations face along the 10,000 kilometers ranging from the US/Mexico border all the way to Cape Horn, Chile, and in particular, how have Trump’s involvement and tariff wars changed the rules of the game?
When we think of the Trump Administration’s interest in Latin America, the first thing that pops into mind for many of us is the issue of drugs. Roughly 60–70% of the world’s total illicit drug production occurs in Latin America—driven mainly by the region’s over 90% share of global cocaine production; a considerable proportion. Some of the administration’s economic actions in the region have therefore been claimed to be motivated by efforts to reduce drug transfer into the US from Latin America. We see this with Trump’s interference in Venezuela, positioning military ships on its coast. He claims to be doing this in an effort to control drug trafficking—however, his motives can be questioned: Is Trump actually sending in forces to combat drug trafficking, or for other purposes?
Venezuela has, since 2013, been under the rule of Nicolás Maduro, officially the president but informally a dictator put in power through what have been proven to be rigged elections. The buildup of American military presence on the Venezuelan coast is therefore regarded by many as Trump’s way of controlling the region. Thus, some believe he will enter the country in an effort to remove Maduro and place someone better suited to comply with his political ambitions.
This theory has ground, as we have witnessed on multiple accounts President Trump’s interest in forming friendships with leaders in the region. To cite a few, one could refer to Bolsonaro—Trump described his trial as a “witch-hunt” and threatened to impose 50% tariffs on Brazilian exports. Or Milei, whom Trump praised as an ideological ally and to whom he provided for Argentina a multibillion-dollar financial lifeline while conditioning support on Milei’s political success. Hence, we see how it might not be such a far-fetched belief.
Nevertheless, we must not forget the Trump Administration’s second main interest in Latin America: illegal immigration. We have already seen this is an issue very dear to the president, as he threatened to impose 25 percent tariffs on all Mexican imports unless Mexico took stronger measures to curb illegal immigration and drug trafficking into the United States. For that reason, many doubt he will actually resort to direct and invasive action in Venezuela. If he does, instability will skyrocket, leading to even more immigration—something Trump wants to avoid and limit at all costs.
All in all, for the reasons discussed above, I believe Trump will surely attack Venezuela but mainly from the sea, and perhaps with a few missiles on land, targeted at very precise locations associated with trafficking—one could think of the Colombian/Venezuelan
border—in order to encourage a breakdown of government from within, without having to risk the possibility of total chaos and possible mass immigration. This would allow him to pursue most of his interests in the region: reducing illegal drug trafficking without direct military intervention—good for his image in the eyes of the American public—facilitating a change of regime in Venezuela, allowing him more control over the region with new alliance opportunities, and keeping in check immigration, one of the administration’s top priorities.
So, after a short study, we see how economic challenges in Latin America are multifaceted and complex. They, however, all have one thing in common: the Trump Administration’s involvement. Latin American countries have had to navigate amid Trump’s tariff wars and learn how to respond without harming their own nations, while simultaneously not ceding power to the most powerful and best-funded military in the world. This key region of the world therefore must be more often referred to and thought of as a gateway to study economic challenges in our modern world.
Emna Coigny is a first year Bachelor student at Bocconi University studying International Government.
