Latin America

Trump misses opportunity to curb China's growing global influence by skipping Summit of the Americas

Key Points
  • Trump's absence marks the first time in the summit's nearly 24-year-long history that a U.S. president will not be in attendance.
  • It is also a missed opportunity for Trump to try and curb China's growing influence in the U.S.' backyard: Latin America.
  • Chinese foreign direct investment in Latin America skyrocketed more than $110 billion between 2003 and 2016.
A journalist working at the international press center of the VIII Summit of the Americas in Lima, Peru.
Fotoholica Press | LightRocket | Getty Images

The Summit of the Americas — a large gathering of leaders from countries in the region, including Mexico and Brazil — kicked off on Friday in Lima, Peru, with one glaring absence: President Donald Trump.

The White House said Tuesday that Trump — who was originally scheduled to attend the two-day summit — will stay in the U.S. to "oversee the American response to Syria" following an apparent chemical attack in the Middle Eastern country. Vice President Mike Pence attended in Trump's place.

Trump's absence marks the first time in the summit's nearly 24-year history that a U.S. president did not attend. It is also a missed opportunity for Trump to try and curb China's growing influence in America's own backyard.

Chinese foreign direct investment in Latin America skyrocketed more than $110 billion between 2003 and 2016, with most of that coming between 2012 and 2016, according to a report last year by Washington-based think tank Atlantic Council.

"There are political implications," said Sean Miner, a fellow at the Atlantic Council. "There is an opening for China to expand its influence there. That's in part due to the lack of attention from the U.S. The U.S. has recently been more focused on other world affairs."

Miner said some of the money was invested in the region's energy, technology and transportation sectors. He also noted that more than 80 percent of Chinese investments in Latin America come from state-run companies, signaling a more hands-on approach to Latin America by China.

"Chinese investments in Latin America are accelerating and will continue to accelerate in countries like Brazil, Argentina and Mexico," Miner notes. "I think that's good for Latin America economically, but not so good for U.S. companies in these countries because they're seeing more competition."

China is increasing its presence in Latin America while a potential trade war with the U.S. may take place in the near future.

Last week, China announced fresh tariffs on 106 U.S. products while Trump asked United States Trade Representative Robert Lighthizer to consider $100 billion in additional tariffs against the Asian country.

The White House said Trump also instructed Lighthizer to consider trying to rejoin the Trans-Pacific Partnership (TPP), a multi-nation deal the U.S. quit after Trump took office. But skipping this weekend's summit won't help Trump mend relationships with some of the TPP's Latin American members, especially Mexico.

"The late-cancellation is a real insult to the other countries attending," said Shannon O'Neil, senior fellow for Latin America studies at the Council on Foreign Relations. "There is a lot of tension between the U.S. and Latin America. It would've been good to smooth them out."

The U.S. and Mexico — along with Canada — are in the middle of renegotiating the North American Free Trade Agreement (NAFTA). Trump told reporters at the White House on Thursday that a deal on the matter was "getting pretty close." However, the president added a renegotiated trade agreement was still "weeks or months away."

Trump has threatened to rip up NAFTA unless he gets some big concessions, particularly for the U.S. auto industry. During his 2016 presidential campaign, Trump called the 1994 agreement the worst trade deal in history.

"US officials [had] previously suggested that an agreement in principle could be reached in time for the Summit of the Americas," said Jon Harrison, managing director and EM macro strategist at TS Lombard, in a note Wednesday. "A delay until at least the end of the month now appears more likely. A new NAFTA deal would confirm US willingness to compromise on trade and help offset the rising criticism of Trump's policy from businesses."

The president has also made disparaging comments about Mexico and its citizens. When he announced his candidacy in June 2015, Trump called Mexican immigrants to the U.S. "rapists." He has repeatedly said the U.S. would build a wall along the U.S.-Mexico border and said Mexico would pay for it.

Mexico is not the only Latin American country where Trump has ruffled some feathers.

Brazil, the largest economy in Latin America, has been in tough negotiations with the U.S. after Trump implemented a 25 percent tariff on steel imports last month. Brazil is one of the top three import sources of steel for the U.S.

Reuters reported Thursday, citing sources, that the U.S. had proposed a quota for Brazilian steel imports that would be tariff-free.

"The U.S. is still a major ally [to Latin American countries]," said Monica de Bolle, senior fellow at the Peterson Institute for International Economics. "But not too many countries are looking too favorably at the Trump administration."

"There has been a sense that the U.S. has no strategy for Latin America," de Bolle said.

The biggest risk heading into the summit — prior to Trump's cancellation — was Trump banging his fist on the table demanding cooperation from Latin American leaders against China, de Bolle said.

But since Pence will be the one attending in Trump's place, the summit might run more smoothly for the U.S., O'Neil from the Council on Foreign Relations said. "We know President Trump is not the most diplomatic person in the world."