Trump's trade crackdown on China has its limits in Latin America

President Donald Trump, never one to speak softly, has tried to use big-stick diplomacy to force a trade showdown with China, but his bravado and hard-edged rhetoric has made it more challenging for the U.S. to check Chinese economic influence in its own backyard.

Trump has chosen to skip the Summit of the Americas, a two-day gathering of Western Hemisphere leaders that kicks off in Lima, Peru, on Friday, leaving it up to Vice President Mike Pence to journey south to use the forum as a platform to emphasize that the U.S. remains the best trading partner for nations in the region.

Pence faces significant challenges in peddling that message to Latin American leaders, however, particularly because the United States’ leverage in the region is not what it once was but also because many Latin American nations stand to gain from a trade war between the world’s two largest economies, at least in the short run.

Latin America, historically part of the American sphere of influence that former President Theodore Roosevelt sought to defend through the big-stick ideology he made famous, has already benefited from closer trade ties with Beijing.

China over the last two decades has gained a larger foothold in the region through shrewd use of billions of dollars in investment and trade. And experts say Trump’s inflammatory rhetoric against Mexico and immigrants from Latin America in general could only further push the region into the arms of Chinese President Xi Jinping.

“There’s been an almost patronizing tone that Latin America should beware of China,” Michael Shifter, president of Inter-American Dialogue, told POLITICO. “The U.S. should come up with a better offer, because they’re not offering a lot — and China is. So, they’re in a weak position without offering a real alternative.”

China’s trade with Latin American nations tops $200 billion in goods each year — and that is poised to grow substantially. Xi in 2015 pledged $250 billion in Chinese investment in Latin America as part of a goal to expand China’s trade in the region to $500 billion annually. Trade between the U.S. and Latin America was more than $260 billion last year, according to U.S. Census Bureau trade data.

While Latin American nations see the potential for greater gains in trade with Beijing, the U.S. under Trump’s leadership has become more of a wild card. Latin American leaders are looking at Trump’s clash with Mexico over immigration, drug trafficking and trade and “don’t want to have a similar problem,” said Carlos Gutierrez, a former Commerce secretary in the George W. Bush administration.

Trump’s aggressive attitude toward Mexico, coupled with the brewing U.S.-China trade battle, “is definitely having an impact on the way Latin American companies and governments think about the world — and they see a potential opportunity to pick up business with China,” Gutierrez told POLITICO.

Pence will have backup in Lima. He’ll be joined by Commerce Secretary Wilbur Ross as well as Ivanka Trump and White House senior adviser Jared Kushner.

U.S. Trade Representative Robert Lighthizer was initially slated to join the U.S. delegation, but won’t be making the trip. His absence upends a plan to hold a NAFTA ministerial-level meeting on the sidelines of the summit with Canadian Foreign Minister Chrystia Freeland and Mexican Economy Secretary Ildefonso Guajardo.

Pence will use the summit to spread the administration’s position that certain external state actors, namely China, are “not productive for the hemisphere, and that the United States should remain the partner of choice for the hemisphere,” a senior administration official said last week.

Pence must be mindful of the risks of creating more tension with Latin American nations if he comes at leaders too aggressively in urging them to look away from China on trade, experts said.

"A divisive approach ... with regard to external actors will very likely be met with a collective eye roll, if not with direct criticism," said Margaret Myers, director of the Latin America and the World Program at the Inter-American Dialogue. Any pressure applied to regional leaders would build on existing frustration with the administration's "lack of coherent and productive policy toward Latin America," she argued.

Peru is one of China’s strongest trading partners in the region; its trade with China surpasses its trade with the U.S. by more than $1 billion annually, according to World Bank figures. Beijing is also the top or No. 2

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