As global markets absorb the shockwaves of the Trump administration’s aggressive trade measures, some investors are eyeing Latin America as a surprising safe haven. While the United States and other major economies grapple with the fallout of escalating trade tensions, Latin American stocks and bonds are showing unexpected resilience—and even promise. Unlike Asia and Europe, much of Latin America has been largely left out of the crosshairs in the ongoing tariff battles, which may be helping its financial markets shine in contrast.
Wall Street’s recent turbulence has left investors seeking alternatives. With the Nasdaq sinking over 20% from its December peak and the dollar hitting a six-month low, global portfolios are undergoing a shift. The MSCI Latin America Index has notably outpaced the S&P 500 by more than 20 percentage points in 2025, signaling a clear divergence. Though a steep selloff last Friday rattled all markets, Latin America’s relative outperformance has attracted attention from both equity and fixed-income investors alike.
Analysts point out that Latin America’s lower exposure to U.S. tariffs is due to a simple but crucial factor: most countries in the region run trade deficits with the U.S., not surpluses. That’s spared them from being directly targeted in Washington’s tariff push. Kathryn Exum, co-head of sovereign research at Gramercy, notes this moment may mark the beginning of a structural shift. “We’re witnessing the early stages of a global trade reorganization,” she explained. “If the world continues toward more regionalized trade blocs, Latin America stands to gain.”
Brazil and Mexico, the region’s economic powerhouses, offer early proof of this narrative. Both have posted stock market gains in 2025, while their currencies have appreciated against the U.S. dollar. Brazil is seen as relatively shielded from tariff damage, and Mexico is still enjoying favored trade treatment due to existing agreements like the USMCA. These dynamics have boosted foreign investor confidence in both nations, drawing in new capital even as volatility elsewhere keeps many investors sidelined.
More broadly, emerging market (EM) assets have been outperforming during this period of instability, supported by improved economic fundamentals and attractive valuations. Shamaila Khan of UBS highlights an evolving investor mindset: “There’s a growing sense that U.S. assets are no longer the default safe bet,” she said. “This is fueling diversification, and Latin America is part of that trend.” Still, she cautioned that no market is entirely immune, especially if global recession fears materialize amid worsening trade disputes.
Yet challenges remain. Latin America’s market size is modest by global standards—the top 10 companies in the MSCI Latam Index are worth a combined $230 billion, compared to Apple’s near $3 trillion valuation. And structural vulnerabilities, like twin deficits and political volatility, could limit foreign capital inflows. “Even if Latin America avoids direct hits from trade wars, countries with fiscal imbalances could suffer indirect fallout,” warned Samy Muaddi of T. Rowe Price. In short, while the region presents opportunities, investors must navigate a complex landscape of risks and rewards.