Client Alert: Colombia Backs Down Following Trump Tariff Threat

What’s Happening?

The White House announced late Sunday (January 31) that Colombia agreed to "all of President Trump's terms" regarding the repatriation of Colombian migrants and confirmed that threatened tariffs and sanctions will not be implemented.  Earlier that day, President Trump threatened Colombia with 25% tariffs, a travel ban, and other sanctions because the country refused to admit two planes of Colombian citizens being deported from the United States.  This is an early instance of Trump following through on his pledge to impose tariffs to address non-trade issues.

Why Does It Matter?

Unless you are importing – or consuming – flowers and coffee (Columbia’s most significant exports to the United States), this action would have been unlikely to have a major impact on your business.  Columbia also exports about $7 billion of crude oil annually to the United States, but, at 2% of imports of this category, this will be less important.  However, depending on how Colombia reacts, the precedent it sets could have far-reaching implications if tariffs are imposed on partners with deeper bilateral trading relationships.  Trump has threatened tariffs of 25 percent on Mexico and Canada and unspecified amounts on China and the European Union..

What Should We do?

Our original advice was to wait for Colombia's reaction and, indeed, the Colombian Government was able to reach agreement with the White House to avert the sanctions. Our judgment was that, given the upcoming Valentine’s Day holiday – with its high demand for cut flowers – an abrupt imposition of tariffs would have hurt an important Colombian business sector at a critical time.  That, combined with most leaders’ interest in not antagonizing the newly-installed Trump administration, gave incentives to Colombia’s leadership to find a solution.  Twice-daily deportation flights are routine and, indeed, these particular flights had received approval before their landing was denied.

What’s Next?

We will be monitoring the media for any additional response and will keep clients appraised of the latest developments.  Since Colombia quickly acceded to Trump’s demands, we can expect tariff threats to continue to be favored as an effective negotiating tactic. 

 Watch out for... Treatment of Brazil ($41 billion in U.S. exports in 2023), which has expressed its own concerns about deportation flights.