According to the Elcano Royal Institute for Strategic and International Studies (Spain), the year 2025 marks a defining stage for Spain–Latin America relations, shaped by the Trump era, three major summits (EU–CELAC, Summit of the Americas, and the Ibero-American Summit), and the ratification process of two major EU trade agreements — EU–Mercosur and EU–Mexico.
These developments present both challenges and opportunities for Spain and the European Union (EU) in their engagement with Latin America.
Spain–Latin America Relations: Toward a Two-Way Partnership
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The relationship between Spain and Latin America is no longer one-directional. Spain is no longer the sole investor in the region; instead, it is now receiving significant investment and migration inflows from Latin America.
Latin American companies, especially from Mexico, have expanded their presence in Spain — with Mexico now among the largest foreign investors in the country. This evolving dynamic calls for a new strategy based on reciprocity, mutual economic benefits, and enhanced political cooperation.
The Trump Era and Its Impact on Latin America
During Trump’s second presidency, the U.S. has tightened trade and immigration policies across Latin America, creating potential friction with several nations. Meanwhile, China continues to expand its economic footprint through strategic investments in infrastructure and natural resources.
In this competitive global landscape, Spain and the EU have an opportunity to position themselves as reliable partners, advancing trade agreements, deepening bilateral relations, and offering stable, sustainable investment alternatives for Latin America.
FDI and Economic Modernization: Key Drivers for Latin America
Despite achieving macroeconomic stability, Latin America’s growth remains insufficient to reduce poverty and absorb new labor market entrants.
To sustain development, the region must attract foreign direct investment (FDI) in strategic sectors such as:
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Green transition (renewable energy, decarbonization)
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Digital transformation and innovation
However, Trump’s administration does not prioritize the green agenda and is expected to discourage Chinese investment in key sectors like infrastructure, telecom, and energy, creating new entry points for European and Spanish companies.
Trade Opportunities Through EU-Mercosur and EU-Mexico Agreements
Trump’s trade policies — including proposed 25% tariffs on imports from Mexico and Canada — may disrupt regional supply chains.
This scenario, however, presents a unique opportunity for the EU, which already has free trade or association agreements with most Latin American economies: Mexico, Chile, Colombia, Peru, Ecuador, and Central America.
If the EU–Mercosur and EU–Mexico modernization agreements are ratified, the EU would cover 95% of Latin America’s GDP, compared to 44% for the U.S. and 14% for China.
Such a network would make the EU the most influential external economic partner in the region.
Spain’s leadership is critical in advancing these agreements, as it was during the negotiation phases, ensuring that Europe remains a strategic and political counterbalance amid U.S.–China tensions.
Macroeconomic Outlook: Stability with Modest Growth
Latin America’s macroeconomic fundamentals have strengthened:
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Single-digit inflation in most countries (except Argentina, Venezuela, and Haiti)
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Improving fiscal discipline and debt stability (IMF projection)
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Robust banking systems with high liquidity and strong reserves — nearly three times the short-term external debt
Argentina’s stabilization plan under President Javier Milei, launched in late 2023, could help the country re-enter the stable macroeconomic group if successful.
Nevertheless, the region’s growth outlook remains weak — with an average projected growth of 2.5% per year over the next five years, insufficient to reduce poverty or sustain middle-class expansion.
Investment and Strategic Competition
As U.S.–China competition intensifies, Washington may exert more pressure to limit Chinese infrastructure investments in Latin America — such as the COSCO–Volcán Chancay Megaport project in Peru, part of China’s Belt and Road Initiative.
These dynamics could open opportunities for EU and Spanish investors, particularly through the EU’s Global Gateway initiative, which pledges €45 billion in investments by 2027 for sustainable, green, and digital infrastructure.
In 2023:
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Spain ranked as the second-largest foreign investor in Latin America (11% of total FDI)
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Spanish FDI accounted for over half of the EU’s total investment in the region
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EU–Latin America trade increased 39% over the last decade, with €693 billion in cumulative investment — nearly equal to the EU’s total investment in China, India, Japan, and Russia combined
Spain and EU: Reliable Partners for Latin America
As geopolitical polarization deepens under Trump’s leadership, Spain and the EU are well-positioned to emerge as strategic and dependable allies for Latin America.
Their cooperation will focus on:
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Green and digital investment partnerships
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Trade diversification and resilience
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Shared democratic and multilateral values
The upcoming EU–CELAC Summit (2025) and the Ibero-American Summit in Spain (2026) will be pivotal platforms for strengthening this transatlantic relationship.
Conclusion: Spain as a Bridge Between Europe and Latin America
Amid global uncertainty, Spain’s role as a bridge between Europe and Latin America is more vital than ever.
Through leadership in the Ibero-American community, Spain aims to promote sustainable growth, mutual investment, and inclusive governance, ensuring that EU–Latin America cooperation remains a cornerstone of global economic stability.