WASHINGTON`S RED LINES IN LATIN AMERICA / GEOPOLITICAL FUTURES

Washington’s Red Lines in Latin America

The emerging understanding between China and the U.S. will come with strings attached.

By: Allison Fedirka

There’s evidence to suggest that the United States and China are gradually getting closer to some kind of understanding over economic and security matters. 

GPF has written extensively that economic cooperation is in both parties’ interests, and that the U.S. needs to secure the Pacific to boot. 

An agreement between these two giants, whose overlapping interests tend to create friction in a variety of economic sectors and geographic regions, would affect nearly the entire world, perhaps most overtly Latin America. 

Indeed, for nearly a decade, U.S.-Chinese competition has been a fixture of Latin American geopolitics. 

So if Beijing and Washington reach an accommodation, their competition there can be expected to subside, provided that China does not cross three U.S. red lines: infrastructure, the dollar and artificial intelligence technology.

China’s presence in Latin America is predicated largely on economic power. 

And, despite its military might, the U.S. isn’t especially interested in expelling China from the region entirely. 

Chinese greenfield investment and sovereign loans in Latin America have significantly declined over the past decade. 

Replacing China’s commercial role in the region is not in the U.S. interest because the composition of trade is very different. 

Latin American countries export raw materials to China in exchange for cheap, manufactured goods, while the U.S.-Latin American relationship is based more on high-value finished goods and some novelty food items. 

More, the U.S. has already crafted a strategy to rely on allies to help provide competition and absorb market space from China. 

Washington does, however, intend to make clear what U.S. security interests in Latin America it will not allow China to jeopardize.

Put simply, the U.S. wants to redefine its role in the Western Hemisphere. 

Though it’s been the most powerful country in the hemisphere for nearly a century, the U.S. lost much of its interest in its near abroad after the Soviet Union fell. 

Only recently has it rekindled its interest. 

Washington means to create not only a strong U.S.-led security apparatus but also a strong foundation of U.S. economic advancement and dominance – the pillars of which, in the eyes of the Trump administration, are infrastructure, technology and the preservation of the dollar as the reserve currency. 

Washington wants to set the standards and drive innovation behind AI, biotech and quantum computing, and it wants to maintain its leadership in capital markets. 

As for infrastructure, Latin American ports are central to U.S. strategy – primarily in their military value – so Washington wants to dislodge Chinese influence in these facilities. 

Over the past decade, Beijing has increased the depth and breadth of its investment in Latin American ports. 

In fact, a recent study from the Center for Strategic and International Studies shows that China is vested in or operates at least 37 ports – that’s about one-third of all valuable ports in the region. 

Washington is naturally concerned that Beijing will use its presence to collect intelligence, disrupt trade and surveil U.S. activity. 

The U.S. has tried to oust China from port operations accordingly, most notably in the Panamanian ports of Colon and Balboa, located at either end of the Panama Canal. 

Washington pushed for a private buyout of Chinese stakes, but its efforts were struck down by Panama’s supreme court, which ruled that Danish logistics company AP Moller-Maersk would operate the ports until the concession formally ends. 

But Panama is not the only case. 

Earlier this year, the U.S. State Department awarded $1.5 billion for the modernization of the Callao Naval Base, the goal of which is to improve Peru’s ability to accommodate naval and logistical requirements. 

The move came a couple of months after China inaugurated the Chancay Port, located just 42 miles (68 kilometers) north. 

The U.S. has also supported Argentina’s efforts to develop the naval facilities at the Argentine port of Ushuaia.

Meanwhile, technology issues, especially AI, have emerged as a fundamental U.S. interest in the region for the role they will play in the future of cyberspace. 

Data centers – and all of their associated components – are important, of course, but so are the software and programming they entail. 

Spheres of influence, after all, are created with the help of technology. 

The internet is a platform for both information and conflict. 

This has already sparked a global debate around AI sovereignty, framed around the need to access AI platforms measured against the cost of creating dependencies. 

On one hand, creating AI services from scratch would eliminate dependencies on foreign platforms. 

On the other hand, creating AI technology requires a huge amount of time, money and technical support that simply doesn’t exist everywhere. 

The U.S. is a pioneer in AI platform development because it has capital and technological advantages. 

Adopting non-U.S. systems would mean acquiring foreign platforms and adjusting them as needed. 

Doing so may be cheaper, but it still creates dependencies on third-party countries in highly strategic areas.

Latin American countries understand the pros and cons of each side of this debate. 

Technology leaders in Chile, Mexico and Argentina have socialized the possibility of creating a regional AI platform, which would make sense in language learning models. 

However, regional tech companies will not be able to develop a state-of-the-art system from scratch faster than the open source models already available. 

They are more likely to adopt modifications to existing models. 

This creates the potential for conflict as both the U.S. and China launched national strategies (and accompanying action plans) in 2025 to ease the way toward global AI supremacy, and both plans involve incorporating foreign users into their systems. 

These strategies necessarily relegate Latin America to a field of competition. 

And given the security implications tied to AI technology, the U.S. will be vigilant, even aggressive, in countering Chinese activity that threatens U.S. interests.

And because commodity exports are so important to Latin American economies, Washington will do everything it can to make sure the dollar remains the world’s reserve currency. 

Over the past 10 years, several major Latin American economies, including Argentina and Brazil, have increased their trade in local currencies. 

Washington has loudly opposed these efforts, especially among members of the BRICS (which includes China). 

It has thus begun to throw its support behind institutions like the International Monetary Fund to help support Latin American economies, including Argentina, Colombia and El Salvador. 

(The IMF aligns with the U.S. vision for economic models and predominantly uses the U.S. dollar.) 

That the U.S. stepped in with a $20 billion bailout of Argentina at the end of 2025 also suggests Washington may be exploring a stronger role in lending – a role China has recently stepped away from, thanks to economic problems at home. 

The U.S. has begun to target local payment systems (namely, Brazil’s Pix), which offer alternatives to U.S. companies that have historically dominated the market. 

Notably, China and the U.S. are not so much at loggerheads in this domain; rather, a weaker U.S. dollar simply benefits China's vision for a more multilateral, flexible and unregulated system.

Ultimately, any accommodation between the U.S. and China will be transactional. 

Even in the best of circumstances, geopolitical partnerships are mutable and evolve based on individual needs. 

Washington and Beijing aren’t about to become stalwart partners; they simply understand that a mutual understanding is in order, and that it will have to have some guardrails in place.