A full-blown US, Colombia trade war averted. Here's why it could have been disastrous

The trade tensions between the United States and Colombia erupted into a high-stakes standoff on Sunday, stemming from the South American nation’s initial refusal to accept deportation flights carrying Colombian nationals aboard US military aircraft.

Colombian President Gustavo Petro’s government cited concerns about the undignified treatment of migrants during deportations, a move aligned with his administration’s emphasis on human rights and sovereignty.

In response, US President Donald Trump, who has prioritised a hardline stance on immigration since his second term began, issued sweeping threats against Colombia.

Trump’s proposals included imposing a 25 per cent tariff on all Colombian imports, which he warned could double within a week if Colombia did not comply with deportation demands.

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Additionally, he threatened to implement visa restrictions on Colombian officials, enhance border inspections of Colombian goods and travellers, and impose financial sanctions on Colombian entities.

The escalating rhetoric highlighted Trump’s broader strategy to curb illegal immigration by using economic and diplomatic pressure.

What was at stake?

Colombia ranks as the third-largest trading partner of the United States in Latin America. Colombia relies heavily on the United States as its largest trading partner, but Colombian exports form a relatively small portion of US imports, reported The New York Times.

Some products, however, are particularly vulnerable. Crude oil, valued at $5.4 billion in 2023, was Colombia’s top export to the US, yet it represents only a small fraction of America’s overall crude imports.

By contrast, Colombia supplied over a third of nursery stock imports and nearly 20 per cent of coffee imports, suggesting potential price hikes for coffee and flowers, especially with Valentine’s Day approaching.

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While the US economy dwarfs Colombia’s, it wouldn’t emerge unscathed from trade tensions. Key industries such as agriculture and raw materials could face significant impacts if tariffs are enforced.

In 2023, US petroleum exports to Colombia reached $2.5 billion, followed by $1.2 billion in corn exports and $1 billion in chemical products. These sectors stand to lose the most in a prolonged dispute.

For US consumers, the tariffs would likely have led to higher prices for Colombian goods, particularly coffee, bananas, and flowers.

According to South Florida-based media outlet WLRN, Colombian flowers, which account for 70 per cent of floral imports at Miami International Airport during the Valentine’s Day season, were at risk of becoming more expensive, potentially disrupting a $2 billion industry.

Coffee, a staple in many American households, also faced price hikes, as Colombia is the third-largest coffee exporter in the world.

On the Colombian side, the tariffs threatened to reduce access to their largest trading partner, jeopardising billions of dollars in export revenue.

Industry leaders in Colombia warned of job losses and economic instability if the proposed measures were implemented. The trade conflict emerged at a time when Colombia was grappling with inflation and a slowing economy, compounding the stakes for Petro’s administration.

How was a resolution reached?

After hours of diplomatic wrangling, the White House announced late Sunday that Colombia had agreed to accept deportation flights aboard US military aircraft.

“The Government of Colombia has agreed to all of President Trump’s terms, including the unrestricted acceptance of all illegal aliens from Colombia returned from the United States, including on US military aircraft, without limitation or delay,” US press secretary Karoline Leavitt said in the statement.

“Based on this agreement, the fully drafted IEEPA tariffs and sanctions will be held in reserve, and not signed, unless Colombia fails to honor this agreement.”

Colombian Foreign Minister Luis Gilberto Murillo confirmed the resolution, noting that the country’s presidential aircraft would be made available to ensure the “dignified return” of deported migrants.

While the immediate crisis was averted, Trump maintained visa restrictions and enhanced inspections on Colombian goods and travelers until the first deportation flight was successfully completed.

What could have been the fallout?

The near-imposition of tariffs revealed the fragility of US-Colombia relations under Petro’s leftist administration.

Traditionally one of Washington’s closest allies in Latin America, Colombia has pursued a more independent foreign policy since Petro’s election in 2022 . His government has distanced itself from US policies on immigration and narcotics, creating friction with the Trump administration.

The episode also highlighted the interconnectedness of economic and diplomatic ties. The potential tariffs could have led to a $3.7 billion loss for Colombian exporters, while US importers faced the prospect of supply chain disruptions and higher costs.

Sectors such as agriculture, floriculture, and energy were particularly vulnerable, with ripple effects expected to impact small businesses and consumers on both sides.

What did this mean for Trump?

For Trump, the resolution was framed as a victory and a signal to other nations. “This is a clear message that the United States will not tolerate resistance to our immigration policies,” a senior US official told AP.

However, the confrontation also highlighted the limits of economic coercion, as the fallout risked damaging key US industries and inflaming anti-American sentiment in Colombia.

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In Colombia, Petro’s insistence on protecting migrant dignity resonated with his domestic audience, bolstering his image as a defender of national sovereignty.

With inputs from agencies