His attacks against El Salvador’s strongman president Nayib Bukele are a potent reminder of the rocky relations the region faces with the US if Trump returns to office.
By Juan Pablo Spinetto, Bloomberg
To Latin American eyes, Donald Trump’s convention speech last week sparked curiosity for a specific reason: his out-of-nowhere dig at El Salvador’s President Nayib Bukele.
The murder rate in El Salvador is down 70%, Trump said as part as his anti-migration arguments, because the country is “sending their murderers to the United States” and Bukele isn’t doing such a “wonderful job” as he’s claiming. This outburst not only denigrated the controversial but effective security strategy that made Bukele a global star but also twisted the facts: the Central American nation has the world’s largest prison population per capita after the government’s draconian tough-on-crime policies, and migration of Salvadoreans to the US has fallen by almost 40% in the past two years.
Like many others, I’ve been scratching my head trying to understand why Trump would smear Bukele when they seemed close allies: Trump’s son Donald Jr. was one of the special guests attending the president’s re-inauguration in San Salvador last month, and Bukele has been very outspoken in favor of Trump over his legal troubles. The country’s adoption of Bitcoin is revered by the libertarian, crypto-loving crowd that Republicans have been wooing. More broadly, the attacks also appear counterproductive: There are 2.5 million Salvadorean-Americans, the third-largest Hispanic community in the US, among whom Bukele is seen as a hero. Why anger these potential voters?
It may well be that Trump is simply jealous of the young and polished leader who captivated the American right with his Tucker Carlson interviews and fired-up speeches at CPAC. Others have speculated that Trump resents Bukele’s alleged relationships with gang leaders and China. Social media has been rife with more bizarre interpretations, including the idea that Trump confused El Salvador with Venezuela. (He didn’t. In fact, he repeated and expanded his comments in his Michigan rally over the weekend.)
Whatever the reasons, the incident is a reminder and a warning: Trump doesn’t have any deep interest or expertise in Latin America and whatever relationships he establishes will be transactional rather than based on ideological affinity – the only affinity possible would be helping satisfy Trump’s domestic goals and self-importance. As for the warning: By attacking a like-minded strongman of the type he’s usually very enthusiastic about, Trump put everyone in the region on notice. In the event of a November victory, Trump 2.0 is likely to unleash radical proposals on his core campaign issues of migration, trade, and security. Latin American leaders will have to be patient and receptive to try to work with a White House that will be more stubborn and unrealistic in its requests.
Trump’s manifesto, if put in place, will imply a significant challenge for the region, beginning with his vow to send millions of illegal migrants back through “the largest deportation operation” in American history. Shutting down the southern border may resonate with US voters but will create a trade backlog given Mexico’s growing influence as supplier. The same holds for the GOP’s pledge to “demolish” drug cartels: If this is going to involve direct US military action, as Trump’s vice presidential candidate JD Vance suggested, the cure may be worse than the disease. Nothing good will come for Washington from destabilizing Mexico, as appealing as that strategy may sound to hardliners. A rebuke by President-elect Claudia Sheinbaum over the weekend may be a taste of things to come.
On the economic front, reducing the corporate tax and raising broad-based tariffs, as Trump proposed in an interview with Bloomberg Businessweek, is likely to diminish the appeal of investing in Latin America, hurting the so-called nearshoring process. Another Vance proposal, to impose a 10% fee on remittances, could boost illegal and informal transfers on top of hitting the much-needed income flow that the region receives through family linkages (estimated at over $150 billion per year).
“Recent developments increase the likelihood of further discussion around ways to tax or put stricter controls on remittances,” Deutsche Bank AG experts warned in a research note last week.
Of course, some of these proposals could be hard to implement given expected court challenges or technical impracticalities. We also know from the 2016 experience that Trump’s aggressive rhetoric goes up a few notches on the campaign trail — only to be brought down by realpolitik considerations once in office. But to disregard or underestimate the scope of these proposals would be a mistake. Americans want results on issues high on the agenda such as illegal migration, drug trafficking and perceived economic decline; fair or not, Latin American governments and companies must prepare to face new demands in these areas.
For investors, the Bukele episode shows the risks of betting on unpredictable policies and leaders. Bonds of the Central American nation have been gaining in the past weeks on speculation that a Trump win in November would put the country closer to a much-needed deal with the International Monetary Fund. That’s now in question. As Barclays Plc credit strategist Jason Keene says, “the diplomatic path ahead could be bumpy.” Argentina’s Javier Milei, who also seems to be banking on a Trump presidency to unlock a new agreement with the IMF, should take notice and think twice before unloading on the organization.
A reelected Trump does have a powerful and more constructive tool: expanding some version of the USMCA, “his deal,” to the rest of the region as a way of pushing for a continental investment and growth agenda. That would put the relationship on a more positive path and counter Chinese influence in Latin America, a priority for any White House occupant. Would Trump go for something like that?
Talking about Trump’s recent harsh comments on migration and trade, Mexico’s nationalist president Andrés Manuel López Obrador said that his “friend” requires convincing because “they aren’t informing him well.” He also called him “visionary,” confirming one of the oddest political partnerships out there. Yet attention must be paid: AMLO knows that negotiating with Trump requires, above all, an appeal to his ego.
Juan Pablo Spinetto JP Spinetto is a Bloomberg Opinion columnist covering Latin American business, economic affairs and politics. He was previously Bloomberg News’ managing editor for economics and government in the region.
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