Chile Brace for Impact: US Tariff Hikes Send Economic Tremors South
The global economy is reeling after the United States imposed sweeping tariffs, triggering what some are calling a “Black Monday” on international stock exchanges. In Chile, Finance Minister Mario Marcel is preparing the nation for potential fallout, acknowledging that the shockwaves “sooner or later will reach Chile.”
Following a dramatic 3.35% drop in Chile’s IPSA index – its largest in eight months – Minister Marcel cautioned that the impact on Chile’s economic activity is inevitable if the tariffs persist. “A shock of this magnitude on the economy, sooner or later, in terms of activity, will reach Chile as long as it is maintained.”
The duration of these tariffs remains uncertain, leaving room for speculation about the US response to its trading partners’ concerns. However, Marcel emphasized the immediate impact: “As an initial shock, it has been one of the biggest that the world economy has received in a long time, as a product of a policy decision.” He contrasted this situation with exogenous events like the COVID-19 pandemic or the international financial crisis, arguing that a policy-driven shock of this magnitude is exceptionally significant.
President Gabriel Boric addressed the situation directly, meeting with Minister Marcel to review economic reports and ongoing discussions with the private sector. Boric tweeted, “We are reviewing reports from the economic teams and working groups in progress with the private sector, regarding the possible impacts after the United States’ decision to impose tariffs unilaterally.” He reassured the public that his government is actively working to protect Chilean families, emphasizing the importance of national unity and highlighting recent efforts to diversify markets, such as the trade mission to India.
Chilean Fruit Exports Face Headwinds
Earlier in the day, an extraordinary session of the Agri-Food Export Council convened, led by the Ministers of Agriculture and Economy, Esteban Valenzuela and Nicolás Grau, respectively, along with Undersecretary of International Economic Relations, Claudia Sanhueza. They met with representatives from export associations to discuss the unfolding scenario.
Iván Marambio, president of Frutas de Chile, stressed the need for collaboration: “The main conclusions are that we have to work together, the public sector with the private, and at the same time, share information so that we can have a fluid relationship, and advance in a good solution for the country.” He warned that the tariffs, particularly on table grapes and citrus fruits destined for the US market, could have a significant impact. “In total, we are talking about around 2 billion dollars that are exported to the US, and a 10% tariff is something that can affect us strongly.”
The Chilean government and private sector are now working in tandem to mitigate the potential damage and explore alternative markets to safeguard the country’s economic stability. The coming weeks will be crucial in determining the long-term effects of this global trade disruption on Chile.
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