LatAm on the run (from Trump)

It is not common that two world leaders who disagree on everything they could possibly disagree on would agree on something, even if for totally different reasons. This is the case of Javier Milei and his Brazilian counterpart, Luiz Inácio Lula da Silva, who are both enthusiastic about a trade agreement that the moribund Mercosur is signing today with the (also ailing) European Union.

Milei and Lula are not on speaking terms, but at least they decided not to block the final sprint of the trade agreement, which has been under negotiation for a quarter of a century. The timing of the accord’s signing is telling: it comes two weeks after the US bombed a South American capital for the first time in history. The country of the capital in question, Venezuela, is technically a member of the South American bloc, yet has been suspended since 2017 for breaching the group’s democratic rules.

Latin American leaders are scrambling to come up with a coherent narrative about what has just happened and how to adapt to the new reality in which the US can use both its sticks and carrots – the former much greater than the latter – to impose its will on the hemisphere. Save for Milei, almost nobody among the region’s main leaders wants to normalise bombing as a way of conflict resolution. At the same time, nobody wants to be on the wrong side of Trump and eventually be next in line for the missiles.

Lula is the one with more at play politically this year. He will seek re-election in October and has a fairly good chance of getting it, given the decent state of the economy (not booming but not busting) and the appalling state of the opposition. Former president Jair Bolsonaro is in prison and banned from running – also for breaching democratic rules. Paradoxically, Trump’s attack on Lula last year gave him an edge in the polls.

Brazil’s leader rushed the Mercosur-EU deal during the country’s turn of the rotating pro-tempore presidency of the bloc, which ended in December, as a way of countering US unilateralism. World upside down: a younger Lula, coming from a background of factory-union activism, would have staunchly opposed a free-trade agreement that will, in theory, play against manufacturing here – and farming in Europe. Now close to turning 80, Lula is prioritising the message of multilateralism and rules-based trade tocounter Trump’s capricious calls.

Lula and other fellow left-leaning regional leaders, like Mexico’s Claudia Sheinbaum and Colombia’s Gustavo Petro, were quick to condemn the US attack on Venezuela but did not follow up, nor do they intend to escalate diplomatic warfare with Trump for the mere sake of their principles. They also know that the region failed miserably in trying to steer the Venezuelan political crisis in 2024, when Maduro and his people openly stole the presidential election. Petro, the most outspoken of Trump’s critics, also rushed to get the US president on the line to tone things down when the threat of strikes on Colombia became palpable.

Given that the White House’s attention seems to have shifted to Iran and Greenland, Trump might not be planning more attacks anytime soon. But having crossed the red line once is enough to tame the eventual bravery of antagonists in the region. The USS Gerald R. Ford is still here in the region. 

If Lula is saving face thanks to the Mercosur agreement with the EU, the leader facing the most complicated picture is Sheinbaum. Mexico is the US’s most immediate security concern, and the two countries, plus Canada, are renegotiating their own trade deal this year, the USMCA that replaced NAFTA a few years ago. Trump has massive leverage in the talks, and for Mexico’s economy, trade with the US is a matter of life or death.

Even if to a less dramatic degree for now, Sheinbaum could easily find herself in a similar situation to Delcy Rodríguez, one in which she has to make concessions to Trump to avoid retaliation but cannot concede too much due to internal pressure from the left-leaning factions of her coalition: the military and security bosses Vladimir Padrino López and Diosdado Cabello, in the case of the interim Venezuelan president; the followers of former president Andrés Manuel López Obrador, aka ‘AMLO,’ in the case of Sheinbaum. They might both be damned (internally) if they comply and damned (by the White House) if they don’t. It is a razor-thin line to tread.

Milei, of course, does not have that problem. Although the Mercosur-EU trade agreement indirectly counters Trump’s tariff shock, many in Washington see it as a sign that South America wants to limit Chinese penetration. European firms work with US counterparts through joint ventures and financing channels. As someone at a US Embassy in a Mercosur member state suggested: “If the trade deal is done with friendly capitalist countries, it serves our core strategic agenda well.”