A Trade War of Tariffs: Colombia Responds
In retaliation, President Petro threatened to impose a 25% tariff on US goods. He proudly proclaimed on social media, “Your blockade does not scare me, because Colombia, besides being the country of beauty, is the heart of the world.” Despite the heated rhetoric, Petro offered his presidential plane to facilitate the return of migrants, which he argued was a more dignified option than the US military’s approach.
The stand-off has intensified not only due to the trade tariffs but also due to the breakdown in diplomatic relations between the two countries. US officials have vowed to implement sanctions and travel bans on Colombian officials, citing national security concerns. Meanwhile, Petro’s government has announced it will retaliate with similar measures against US imports.
The Impact on Colombian Exports to the US
The tariffs could have significant consequences for specific sectors, particularly for Colombian exports to the United States. Colombia is a major supplier of coffee, flowers, and crude oil to the US, and any sustained escalation in tariffs could raise prices for consumers. The US imports over 20% of its coffee, worth nearly $2 billion, from Colombia, as well as other goods like bananas, crude oil, and avocados.
If tariffs increase, the price of Colombian coffee, for instance, could rise from $6.33 to $7.91 per pound. Consumers, particularly in the coffee-loving US, could feel the pinch as coffee prices increase. Additionally, the US imports more than one-third of its flowers from Colombia, which could lead to price hikes on floral products, especially with Valentine’s Day approaching.
Risks for US Agriculture and Industry
The trade dispute also poses a significant risk to US industries, particularly in agriculture and chemicals. In 2023, the US exported over $1.2 billion worth of corn and $1 billion in chemicals to Colombia. If Colombia imposes retaliatory tariffs, it could disrupt these markets, leading to potential financial losses for US farmers and manufacturers. US petroleum products, corn, and chemicals made up a significant portion of US exports to Colombia, collectively worth billions of dollars in trade.Trump’s tariffs, aimed at increasing pressure on Colombia, are likely to target a range of goods from crude oil to consumer products. However, US agriculture, which relies heavily on international markets, may be hit harder than initially expected if Colombia follows through on its tariff threats.
The Potential Global Impact of Retaliatory Tariffs
While Colombia’s economy is smaller and more dependent on trade with the US than vice versa, the conflict could have broader global economic implications. As the World Trade Organization’s Director-General Ngozi Okonjo-Iweala warned, retaliatory tariffs could spiral into a global economic crisis. “If we have tit-for-tat retaliation… we’re going to see double-digit global GDP losses. That’s catastrophic. Everyone will pay,” she stated.
The ongoing trade war between the two countries could also increase global commodity prices, especially for products like coffee and crude oil. While the US imports crude oil from Colombia, its impact on global oil prices may remain relatively limited due to the global nature of oil trading.
What’s Next for US-Colombia Relations?
Despite the growing tensions, the future of the US-Colombia relationship remains uncertain. While Colombia has offered its presidential plane to assist with the return of deported migrants, it remains to be seen if this gesture will be enough to avert a full-blown trade war. Trump’s administration has made it clear that the tariffs will remain in place unless Colombia fulfils its commitments regarding deportations.
Petro’s administration has vowed to stand firm, with Petro reiterating his commitment to protecting Colombia’s sovereignty. “From today on, Colombia is open to the entire world, with open arms,” he declared. However, the growing diplomatic divide may lead to continued disruptions in trade and diplomatic relations.
US to Feel the Effects on Everyday Items
The immediate effect of the tariff dispute is likely to be felt by US consumers. Items like Colombian coffee, flowers, and emeralds, popular imports from Colombia, could see price hikes. For example, the cost of a typical two-carat Colombian emerald ring could rise by $517, reaching a new price of $2,587. As for coffee, the price per pound could increase by $1.58, making it more expensive for everyday buyers.
Additionally, the broader impact on the US economy remains a concern, particularly for sectors dependent on Colombian exports like agriculture and chemicals. If these tariffs are enforced, US farmers, chemical manufacturers, and other businesses may face a serious economic downturn.
However as per latest Reuters reports, The United States has agreed to not sanction Colombia for accepting deported migrants. The White House press secretary confirmed this decision late Sunday. Colombia agreed to take back its citizens deported from the U.S.
The White House press secretary said: “The U.S. will not impose sanctions and tariffs on Colombia after the South American nation agreed to accept deported migrants from the United States.” This agreement averts potential trade penalties against Colombia. No further details were released about the agreement.
