Shifting Dynamics with U.S.-China Competition in Latin America

On January 3, 2026, the United States government captured the incumbent Venezuelan president Nicolás Maduro. Beyond the domestic and international motivations behind this military operation, Washington aimed to halt Chinese operations in Venezuela and to send a message: stay away from the Americas. Secretary of State Marco Rubio made a speech following the operation: “This is the Western Hemisphere. This is where we live—and we’re not going to allow the Western Hemisphere to be a base of operation for adversaries, competitors, and rivals of the United States.”

Despite being one of China’s closest partners and its largest oil supplier in Latin America, Beijing’s response was notably restrained. While condemning the United States for violating international law and engaging in unilateral bullying, Beijing adopted a low-profile approach, protesting through diplomatic channels rather than exercising hard power. This strategy was visible on January 12, when two China-flagged supertankers scheduled to pick up Venezuelan oil quietly made U-turns and headed back to Asia. Beijing has also sought to avoid any comparison between Venezuela and Taiwan—what the United States did to Maduro could give China legitimacy for using force against Taiwan, but Beijing actually has little incentive to draw that comparison.

This incident raises a critical question: Is the United States reclaiming its influence in the Latin America and will China’s engagement there change? While the Venezuela event was a critical turning point, it is unlikely to fundamentally affect China’s broader strategic engagement with Latin America. Instead, China will continue to expand its economic ties, use trade to isolate Taiwan, and tailor its approach to U.S.-China competition region by region based on specific concerns about economic interests, spheres of influence, and sovereignty.

Following Maduro’s capture, experts from the Brookings Institution wrote that “PRC [People’s Republic of China] activity in Latin America may face pushback from the United States and regional countries fearful of U.S. retaliation.” In reality, that pushback was already in motion as Washington began leveraging its influence to force a regional pivot. On February 7, President Donald Trump met with the newly elected president of Honduras, Nasry Asfura, whom he had backed during the 2025 presidential election. Asfura signaled that he would reconsider Honduras’s ties with China and reopen relations with Taiwan. Since China views the Taiwan issue as the foundation of any economic activity in Latin America, as seen in “Five Programs for Building a China-LAC Community with a Shared Future,” such a move could create significant political obstacles to the expansion of Chinese economic negotiations or engagement.

Honduras is not alone in this realignment; Panama has also shown its resolve to decouple from China. After quitting the Belt and Road Initiative in February 2025, shortly after Trump returned to office, Panama’s Supreme Court ruled in January 2026 that the Chinese port contracts on the Panama Canal were unconstitutional, a year after Trump threatened to take over the Panama Canal. On February 27, 2026, Chile denied a Chinese medical ship authorization to provide medical services to local residents, giving in to pressure from the United States, which a week prior revoked U.S. visas to three Chilean government officials involved in China’s deep-sea cable project. Ultimately, these shifts suggest the Venezuela operation was the one part of a broader strategy of sustained U.S. pressure and threats rather than the catalyst for these shifts.

Despite intense pressure from the United States, the shift away from Beijing hasn’t been universal. Many Latin American countries are still grappling with economic downturns and uncertainty surrounding the United States’ global policies. Beijing is taking advantage of this uncertainty, seeking cooperation opportunities to expand its global trade network and to exploit skepticism about the United States to secure more trade agreements. For example, Brazil had long vetoed a free-trade agreement with Beijing due to concerns about protecting domestic manufacturers, but it has now signaled a willingness to negotiate a partial trade agreement because of concerns over U.S. tariffs.

Similarly, on February 3, 2026, China’s president Xi Jinping met with Uruguayan president Yamandú Orsi to push for a free-trade agreement with the Mercosur bloc, which includes Brazil, Argentina, Paraguay, Uruguay, and Bolivia. Peru has also pushed back against U.S. warnings that the Chinese-owned Chancay megaport, located about 50 miles north of Lima, undermines Peru’s sovereignty. Peru’s foreign minister, Hugo de Zela, said in an interview with Canal N, a Peruvian news channel, that “it is absolutely clear that sovereignty is not at stake,” following a Peruvian court ruling that restricted a local regulator’s oversight of the port. Such a ruling enables smoother operations for the port, which was inaugurated in 2024 and is poised to become a major South America–Asia shipping hub.

While China is losing economic and diplomatic ground in some Latin American countries, this is not a return to a Cold War-style struggle for ideological spheres of influence. This modern divide is not primarily over ideology or sovereignty, even though diplomatic tensions over Taiwan and concerns about sovereignty suggest otherwise.

The true strategic calculation by these leaders still lies in economic interests—which power can provide more stable and sustainable economic benefits? The answer will depend on U.S. trade policy, China’s ability to fulfill its commitments to increase imports and exports, and the economic benefits of mega infrastructure projects. In this high-stakes environment, Latin American nations are active participants weighing the political and security risks of cooperating with either superpower against their own national interests.

How a Latin American country navigates through this U.S.-China contest shows a boarder trend in great power competition. In the past, democratic values and the credibility of U.S. institutional checks and balances were important considerations for many countries when choosing to cooperate with the United States rather than China. Today, however, that calculation has become less clear-cut relative to material considerations, and a country’s choice could vary more based on their domestic economic interest rather than ideological values. Before Trump’s second term, the division between rival blocs was clearer and largely defined along ideological lines—liberal democracy versus illiberal authoritarianism. Today, that ideological boundary has become far murkier. China presents itself internationally as a supporter of multilateralism, “win–win” cooperation, and equality in diplomatic relations. Yet its domestic political structure raises concerns about the lack of institutional constraints on state power and can place partner countries in asymmetrical positions during economic and political cooperation.

At the same time, the United States has retreated from aspects of the liberal internationalist approach it long championed. Nevertheless, it remains the world’s most advanced democracy, supported by deep institutional capacity and social capital, even as democratic norms face internal challenges. As the ideological divide becomes less distinct, competition between the two powers increasingly centers on security and economic interests. Countries that have maintained ties with both the United States and China over the past decades may therefore face difficult strategic choices: cooperation with one great power could invite pressure or retaliation from the other. For many countries, the strategic calculation thus becomes more material: which partner can provide more stable economic opportunities and which relationship carries greater security risks.

Yujia Wan is a political science PhD candidate with a minor in computational social science at UC San Diego and a 2025-26 IGCC Dissertation Fellow.

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