A New Era in US–Colombia Bilateral Relations

30 crucial hours for the relations between Colombia and the US 

Decisions, impacts, and consequences 

Due to President Petro’s social media posts stating that he would not accept deported migrants, President Trump announced a series of measures on Truth Social in response. Among these, he highlighted the imposition of a 25% tariff on Colombian imports, effective immediately, which would increase to 50% the following month if Colombia maintained its stance of rejecting deportees.

Additionally, the US announced the revocation of visas for Colombian government officials, allies, and sympathizers, as well as the immediate suspension of issuing new visas for Colombian citizens. These measures were justified by the US government as necessary to protect national security.

In response, President Petro instructed the Minister of Commerce to implement a 25% tariff on US products for one month, increasing to 50% in the second month if the US maintained its stance. He also announced that he would not allow the entry of military planes with deported citizens who were not treated with dignity, demanding that the US use commercial planes for such deportations.

Following the statements from both leaders, two meetings were held between representatives of the Colombian and US governments where it was agreed that Colombia would accept deported citizens without restrictions, including those transported on military planes. In response, the US State Department announced a temporary suspension of the decision to impose new tariffs on Colombian imports, although visa restrictions would remain in place until the first flight of deportees arrived in Colombia. The implementation of these decisions would depend on the Colombian government’s compliance with the agreements reached in these meetings.

Impacts on Trade

Trade relations between Colombia and the US have been characterized by close cooperation in economic, commercial, and political matters for over 200 years. In commercial terms, Colombia exports approximately 37.9% of its total global export offerings to the US.

Before the implementation of the US-Colombia Trade Promotion Agreement, a free trade agreement that removed tariffs and trade barriers in 2012, Colombia maintained a trade surplus with the US, meaning it exported more than it imported. However, since 2014, Colombia has had a trade deficit as imports from the US have exceeded the total exports to the country.

• From January to August 2024, Colombia recorded a trade deficit of USD 1.331 million in its bilateral trade with the US, as imports exceeded exports by 14.12%.
• Foreign direct investment (FDI) in Colombia has quintupled over the last ten years, with 25.4% of the total FDI in Colombia coming from the US.

Had the emergency tariffs of 25% imposed by the US on Colombian imports remained, there would have been significant commercial implications for both Colombia and US companies:

• The tariffs would have increased the cost of key Colombian products in the US market, such as flowers, coffee, bananas, textiles, and other agricultural goods, reducing their competitiveness compared to other exporting countries, like Mexico or Ecuador. The resulting reduction in Colombian exports would have deepened the existing trade deficit between the two countries.
• Economic sectors that depend on trade with the US, such as flower growers and coffee farmers, would have suffered significant losses. 

Future consequences

President Trump’s announcements are a clear signal that changes in bilateral and multilateral relations will be applied firmly and decisively, marking a significant shift in US foreign policy. This is particularly evident in his stance towards Latin American countries, about which he has stated, “[They] need us more than we need them.”

The main instrument for this will be the implementation of the International Emergency Economic Powers Act (IEEPA), which grants the president powers to regulate trade and take economic actions in response to national emergencies that pose an unusual and extraordinary threat to national security, the economy, or foreign policy. The measures President Trump sought to apply to Colombia under this law include tariffs on imported products, visa issuance restrictions, and other economic actions. Although measures adopted under this law take immediate effect, Congress can limit their scope or assess whether the actions taken justify the emergency declaration that supports them.

Another measure the US might consider relates to funds allocated for international aid and cooperation. It is worth noting that one of President Trump’s first actions was to suspend the flow of resources for 90 days to evaluate whether the cooperation was directed to countries and projects aligned with American values. In this context, the events of this weekend could influence the US State Department’s decision regarding the cooperation funds the US government allocates to Colombia.

Additionally, recent events could complicate some aspects of the ongoing review of US-Colombia Trade Promotion Agreement. Although issues related to legal aspects, the agricultural sector, and a specific review requested by the Colombian government on intellectual property were being evaluated, Trump’s arrival to power, coupled with recent events, could alter the course of these discussions and modify the conditions established in the agreement.

In this sense, the upcoming meetings announced by the Colombian government with US representatives will be crucial. Outgoing Foreign Minister Murillo, Ambassador García-Peña, and incoming Foreign Minister Sarabia will work with their American counterparts to establish a roadmap and the steps to follow in the relationship between Colombia and the US. A moderate approach that considers all the implications of a possible fracture in bilateral relations will be essential to finding solutions that benefit both nations. 

Legality of possible measures

In the event that the agreements reached between both governments are breached and it is confirmed that the US imposes a 25% tariff on Colombian imports despite having a free trade agreement (FTA) in place, Colombia could respond with similar measures under the principle of reciprocity, provided these are proportional to the damage caused. The response should balance the commercial impact and respect the rules of the FTA and international law. Excessive measures would violate several principles, such as good faith.

The FTA establishes formal dispute resolution mechanisms, such as the intervention of the Free Trade Commission and the application of compensatory measures in case of serious breaches. Colombia can only impose equivalent measures after exhausting these procedures and obtaining a favorable decision under the terms of the treaty.

However, as members of the World Trade Organization (WTO), both Colombia and the United States must adhere to international trade rules. The unilateral imposition of tariffs without adequate justification violates WTO norms and is subject to review by the WTO’s dispute resolution mechanisms. Therefore, Colombia cannot take immediate and unilateral retaliatory measures. Instead, the mechanisms of the FTA should be activated to resolve the dispute, and the WTO should be approached if a bilateral solution is not achieved.

Only after a formal ruling that supports the measures could Colombia impose equivalent tariffs, respecting the established procedures. Although the principle of reciprocity allows for response measures, these must be proportional, legally backed, and follow the resolution mechanisms provided in the FTA and the WTO. Finally, unilateral actions could generate greater legal and commercial risks for Colombia. 

Diplomatic tensions

Since Donald Trump took office on January 20, his administration has demonstrated a new focus on Latin America. Key appointments, such as Marco Rubio and Mauricio Claver-Carone, have made it clear that the region will be watched closely. This focus has also been reinforced by statements from Tammy Bruce, spokesperson for the Secretary of State, who said: “We won’t continue to ignore the region as other administrations have…engaging with our neighbors is a vital element in addressing migration, supply chains and economic growth, which are key to Secretary Rubio’s pursuit of foreign policy focused on making America strong, prosperous, and safe.” Accordingly, Rubio’s first overseas trip as Secretary of State is expected to be to Panama and neighboring countries in Latin America later this week.

The recent diplomatic impasse between Trump and Petro not only generated bilateral tensions but also highlighted regional dynamics and the complexities of diplomacy in Latin America. On one hand, Petro’s strategy of taking a stand against the Trump administration’s actions on migration issues was not supported by his regional counterparts with similar political leanings, such as Lula da Silva in Brazil or Claudia Sheinbaum in Mexico. Both leaders have opted for more conservative and pragmatic approaches, likely to mitigate the risk of reprisals from the United States and avoid tensions that could compromise their own internal agendas or relations with Washington.

On the other hand, this episode also highlighted the challenges the United States faces when dealing with governments of different political orientations in the region. The strong response towards Colombia could be interpreted as an implicit warning to other Latin American countries, sending a clear message about the limits of the Trump administration’s tolerance for measures that may be considered challenging to US interests.

In conclusion, the case of Colombia not only reflects the inherent tensions in bilateral relations but also highlights how the pieces are beginning to move on the Latin American chessboard. 

Key stakeholders

What to watch

As diplomatic tensions between the United States and Colombia subside, several key issues and events warrant close attention due to their potential implications for bilateral relations, regional dynamics in Latin America, and the business environment:

Implementation of Deportation Agreements: Following Colombia's agreement to accept deported nationals, including those transported on US military aircraft, it is crucial to monitor how this agreement is executed. The US administration's aggressive deportation strategies and use of economic leverage to enforce compliance have significant implications for Latin American countries. Observing how these policies evolve and their reception in the region will be critical for understanding future migration trends and bilateral relations—and potential watchouts for businesses.

Regional Reactions and Solidarity: Latin American countries are closely observing the US's assertive stance on immigration and trade. The US's firm approach toward Colombia may serve as a precedent, influencing how other nations in the region navigate their diplomatic and trade relationships with the US. Regional solidarity or dissent in response to US policies could reshape alliances and economic partnerships.

Potential for Future Trade Disputes: The recent confrontation, marked by threats of significant tariffs and sanctions, underscores the impact US immigration policy and other domestic factors can have on relations between the US and trading partners—even those with free trade agreements and long-standing stable relations. Businesses should remain vigilant for any signs of escalating trade measures or policy shifts that could affect import and export dynamics, particularly in sectors like agriculture and manufacturing.

Impact on Foreign Direct Investment: The recent tensions may cause investors to reassess the stability of Colombia's business environment. Outcomes of upcoming meetings with outgoing Foreign Minister Murillo, Ambassador García-Peña, and incoming Foreign Minister Sarabia will be key indicators. Monitoring FDI trends will be essential, as shifts could influence economic growth and development projects. Businesses should stay informed about investor sentiment and potential changes in investment flows resulting from geopolitical developments.

Domestic Political Responses in Colombia: The Colombian government's handling of the dispute and its concessions to US demands may influence domestic politics. Public opinion and political opposition reactions could affect policy decisions and the administration's stability. Keeping abreast of internal political developments will provide insights into Colombia's future diplomatic posture and policy directions. 

Materials presented by Edelman's public & government affairs experts. For additional information, reach out to Valentina.Dangond@Edelman.com or Paula.Garcia@Edelman.com .