China’s New Megaport in Peru Boosts Latin American Trade, Drawing US Attention

As global anticipation surrounds how Donald Trump’s return will influence relations between Washington and Beijing, China has recently undertaken a decisive move to solidify its presence in Latin America. Trump secured the US presidential election on a platform advocating tariffs as high as 60% on Chinese-made goods. Further south, however, a newly established China-backed megaport holds the potential to forge entirely new trade routes, completely bypassing North America. President Xi Jinping personally attended the inauguration of the Chancay port on the Peruvian coast this week, signaling China’s significant commitment to the project. Xi was in Peru for the annual Asia-Pacific Economic Co-operation Forum (Apec) meeting. Nevertheless, focus remained on Chancay and what it signifies regarding China’s increasing assertiveness in a region traditionally considered the US’s sphere of influence. According to seasoned observers, Washington is now experiencing the repercussions of years of neglect toward its neighbors and their requirements. “The US has been absent from Latin America for so long, and China has moved in so rapidly, that things have really reconfigured in the past decade,” states Monica de Bolle, a senior fellow at the Peterson Institute for International Economics in Washington. “You have got the backyard of America engaging directly with China,” she informed the BBC. “That’s going to be problematic.” Even before its opening, the $3.5bn (£2.75bn) project, conceived by China’s state-owned Cosco Shipping, had already transformed a once-tranquil Peruvian fishing town into a logistical hub poised to revolutionize the country’s economy. China’s official Communist Party newspaper, the People’s Daily, described it as “a vindication of China-Peru win-win co-operation.” Peru’s President Dina Boluarte expressed similar enthusiasm, characterizing the megaport as a “nerve centre” that would offer “a point of connection to access the gigantic Asian market.” However, the implications extend far beyond the prosperity of a single small Andean nation. Once Chancay is fully operational, goods from Chile, Ecuador, Colombia, and even Brazil are expected to transit through it en route to Shanghai and other Asian ports. China already exhibits substantial demand for the region’s exports, including Brazilian soybeans and Chilean copper. This new port will now be capable of accommodating larger vessels and reducing shipping times from 35 to 23 days. Nonetheless, the new port will benefit imports as well as exports. As evidence mounts that an influx of inexpensive Chinese goods purchased online may be detrimental to domestic industry, Chile and Brazil have eliminated tax exemptions for individual consumers on low-value foreign acquisitions. As concerned US military strategists have indicated, if Chancay can accommodate ultra-large container vessels, it also possesses the capability to handle Chinese warships. The most forceful warnings have come from Gen Laura Richardson, who recently retired as chief of US Southern Command, which encompasses Latin America and the Caribbean. She has accused China of “playing the ‘long game’ with its development of dual-use sites and facilities throughout the region,” adding that these sites could serve as “points of future multi-domain access for the [People’s Liberation Army] and strategic naval chokepoints.” Even if that scenario never materializes, there is a strong perception that the US is losing influence in Latin America as China progresses with its Belt and Road Initiative (BRI). Outgoing US President Joe Biden was among the leaders at the Apec summit, marking his first and only visit to South America during his four-year term. Media commentators observed that he appeared less prominent alongside China’s Xi. Prof Álvaro Méndez, director of the Global South Unit at the London School of Economics, highlights that while the US took Latin America for granted, Xi regularly visited the region and cultivated positive relationships. “The bar has been set so low by the US that China only has to be a little bit better to get through the door,” he states. Naturally, Latin America is not the sole global region targeted by the BRI. Since 2023, China’s unprecedented infrastructure spending has injected funds into nearly 150 countries worldwide. The outcomes have not always been favorable, with many projects left incomplete, and numerous developing nations that accepted Beijing’s generosity subsequently burdened with debt. Even so, both left-wing and right-wing governments have set aside their initial skepticism of China because, as Ms de Bolle of the Peterson Institute explains, “their interests are aligned” with Beijing’s. She adds, “They have lowered their guard out of sheer necessity.” Ms de Bolle asserts that the US is justified in feeling threatened by these developments, given Beijing’s establishment of “a very strong foothold” in the region at a time when president-elect Trump intends to “rein in” China. “I think we will finally start to see the US putting pressure on Latin America because of China,” she says, noting that most countries wish to maintain good relations with both major powers. “The region doesn’t have to choose unless it’s put in a position where they are forced to, and that would be very dumb.” Looking ahead, South American countries such as Peru, Chile, and Colombia could be susceptible to pressure due to their bilateral free trade agreements with the US, which Trump might seek to renegotiate or even terminate. They will closely monitor the fate of the United States-Mexico-Canada Agreement (USMCA), which is due for review in July 2026, but will undergo negotiations during 2025. Regardless of future events, Prof Méndez of the LSE believes the region requires greater cooperation. “It shouldn’t be that all roads lead to Beijing or to Washington. Latin America has to find a more strategic way, it needs a coherent regional strategy,” he says, acknowledging the difficulty of achieving a joint approach among 33 countries. Eric Farnsworth, vice-president at the Washington-based Council of the Americas, perceives that significant goodwill towards the US still exists in Latin America, but the region’s “massive needs” are not being addressed by its northern neighbor. “The US needs to up its game in the region, because people would choose it if there was a meaningful alternative to China,” he informed the BBC. Unlike many others, he identifies some positive signs from the incoming Trump administration, particularly with the appointment of Marco Rubio as secretary of state. “Rubio has a real sense of a need to engage economically with the Western Hemisphere in a way that we just haven’t done for a number of years,” he states. However, for successive US leaders, Latin America has primarily been viewed in terms of illegal migration and illicit drugs. And with Trump focused on plans to deport record numbers of immigrants, there is little indication that the US will alter its strategy anytime soon. Like the rest of the world, Latin America is preparing for a challenging four-year period – and if the US and China initiate a full-scale trade war, the region risks being caught in the crossfire.