Jorge Heine, former Chilean ambassador to China, stated on Sunday that the "reciprocal tariffs" imposed by the United States may severely impact Chile given its heavy dependence on export markets, with some in the Latin American country concerned about a potential global recession.
During an interview with China Global Television Network (CGTN), Heine said that despite its diversified export markets, Chile could still be impacted if the tariffs induce a slowdown in worldwide trade.
"Obviously, it is potentially a very negative impact that it can have. Chile depends very heavily on the world market. Chile is a country with (one of) the highest number of free trade agreements in the world. Chile has something like 30 free trade agreements with 65 countries around the world. Therefore, export markets are very important for Chile, and we are also concerned about the possibility of a worldwide recession. So, it isn't just a question of our exports to the United States, it is also a question of what will happen with the global economy more generally," Heine said.
"Chile is in a privileged position in the sense that we have diversified our markets quite a bit. For Chile, China is our No. 1 export market, something like 40 percent of our exports go to China. The United States is our second largest export market, but we also export quite a bit to Europe and to Latin America. So, we have a diversified export basket, but even so, these things can hurt us pretty badly," he said.
On the broader picture, the former ambassador emphasized that Trump's will have serious repercussions for global growth and could even backfire for the U.S.
"There are some people that say that the real purpose of this exercise is to decouple the U.S. economy from the Chinese economy. And that it seems to me would be a very serious mistake. Between the two economies, between the U.S. and the Chinese economies, they represent something like 43 percent of the world's GDP. And the bilateral trade between China and the U.S. is around 600 billion dollars. So, to attempt to decouple these two economies would cause enormous damage to the world economy as a whole," said Heine.
"I would hope that there is some pulling back on this. I think we're already seeing some signs. There was today an announcement of President Trump that things like phones, and some computers and laptops, some chips would be exempted from these very high tariffs that the U.S. government has imposed on China. So, we may see some backtracking there," he said.
US tariffs could severely impact Chile despite diversified trade: former Chilean ambassador
