Welcome back to Foreign Policy’s Latin America Brief.
The highlights this week: U.S. President Donald Trump’s attacks on Brazil reflect a larger conflict over the U.S. dollar, Mexico City officials respond to anti-gentrification protests, and an Argentine screenwriter sees politics imitate her show.
Trumps Tussles With Brazil’s Payment System
U.S. President Donald Trump’s relatively calm relationship with Brazil has soured in recent weeks as he threatened a whopping 50 percent tariff rate on Brazilian exports and announced new visa bans on Brazilian judges presiding over the ongoing trial of former President Jair Bolsonaro for allegedly participating in a coup plot.
In addition to dissatisfaction with Bolsonaro’s trial, the Trump administration cited a range of grievances driving its escalation, including Brazil’s treatment of social media platforms and even deforestation.
But another key concern is Brazil’s modest effort to chip away at the global dominance of the U.S. dollar. Last week, the United States opened a trade investigation that will probe whether Brazil unfairly favors the instant payment system run by its central bank, Pix, against other payment services. The system’s competitors include U.S. credit card companies.
Pix, which is free for individual users, has boomed since its introduction in 2020. It is used by around 76 percent of Brazilians, according to the central bank, and the International Monetary Fund and G-20 have praised it as a success story. Pix’s simplicity has provided access to electronic transfers for many Brazilians who previously did not have a bank account.
But Pix also has geopolitical implications, former Brazilian diplomat Philip Yang wrote this week in Piauí. The payment system, which has moved upwards of the equivalent of $450 billion per month so far this year, “operates outside the dollar ecosystem. It represents the embryo of independent systems, such as BRICS Pay”—referring to the payment system under development to facilitate transactions among BRICS member countries in their own currencies—“that threaten the slow and expensive monopoly of the SWIFT system.”
Belgium-based SWIFT is the world’s main system for messaging between banks to facilitate transfers. Notably, it also cooperates with U.S. authorities in their enforcement of financial sanctions. That is something that a BRICS payment system, if one ever gets off the ground, would almost certainly not do.
The United States is so focused on protecting dollar dominance, Yang wrote, in part because its dominance in other realms of the global economy—such as goods exports and leadership in certain cutting-edge technologies—has slipped to China.
However, Trump’s recent actions toward Brazil may backfire and hurt the United States’ global position, financial or otherwise.
For instance, many foreign-policy observers saw the visa ban on Brazilian judges as an overstep. Some in Bolsonaro’s inner circle have lobbied Trump to go further and impose financial sanctions on the judges under the Global Magnitsky Act, which would require more proof of wrongdoing than a visa ban.
“I can’t imagine that they’re going to be able to successfully justify corruption [accusations] for every single member of the Supreme Court,” said Jana Nelson, a former senior U.S. Defense Department official for Latin America.
Financial sanctions on Brazilian judges could also offer further incentive for Brazil to diversify away from U.S. dollar trade altogether. That wouldn’t be a surprise, Nelson said, though Brazil is limited in the short term by the current structure of the financial sector, the need to control inflation, and Brazilians’ personal and familial ties to the United States and its dollar system.
Many Brazilian foreign-policy thinkers, for their part, are urging such a shift. “More than ever, Brazil must lead, together with its BRICS partners and other blocs, the development and integration of independent payment and trade systems,” Yang, the former Brazilian diplomat, wrote.
Upcoming Events
Friday, Aug. 1: U.S. tariffs of 30 percent on Mexican goods and 50 percent on Brazilian goods are due to take effect if no alternative rate is agreed on.
Sunday, Aug. 17: Bolivia holds general elections.
What We’re Following
Argentina-China thaw. On Tuesday, Argentina eased entry requirements for some Chinese visitors, who now no longer need additional entry visas if they have valid U.S. ones. The move comes after China extended its visa-free entry policy to citizens of Argentina, Brazil, Chile, Peru, and Uruguay starting in June.
Last week, Argentine President Javier Milei’s administration also signed an agreement to resume work on two Chinese-backed hydroelectric projects in the southern Santa Cruz province that had been stalled for almost two years amid payment and contract delays.
These are the latest pro-Beijing steps for the right-wing Milei, who criticized China during his 2023 campaign but has moderated his stance since taking office as he seeks to stabilize Argentina’s finances.
A woman speaks into a microphone during a protest against gentrification in Mexico City on July 20.Toya Sarno Jordan/Getty Images
Mexico gentrification protests. Mexico City has been celebrated as a destination for digital nomads, with a rush of Americans and others moving there since the start of the COVID-19 pandemic. Housing prices in certain neighborhoods have shot up as a result, and this month has seen two anti-gentrification protests in the city.
Last week, Mexico City Mayor Clara Brugada announced a plan to promote housing affordability that included strengthening renters’ rights and building more public housing. The city already limited rent increases to the rate of inflation last year.
Experts say what is needed is quick and bureaucracy-free construction of far more housing units; only around 3,500 new homes were registered in the city in 2023, according to a director at developers’ association Canadevi.
Evangelicals on- and off-screen. Art often mimics life, but Argentine screenwriter Claudia Piñeiro wrote in a recent essay that she never imagined how much politics would mimic her Netflix series The Kingdom. The show, which she began co-writing in early 2018, features an Argentine presidential election decided in part by the influence of evangelical pastors.
At the time, Piñeiro was inspired by neighboring Brazil. But now, Milei has made a major effort to bring evangelical churches into party politics, this month becoming the first sitting Argentine president to speak at the inauguration of an evangelical temple, where he argued that left-wing income redistribution policies were not Christian.
Milei’s desired alliance with Argentine evangelicals is far from a done deal. The group is heterogenous and still lacks links to organized party politics compared with evangelicals in Brazil. But as evangelicals are estimated to make up at least 15 percent of the population in Argentina, they are catching the attention of politicians.
Question of the Week
What is a slang word for someone from Mexico City?
The term was derogatory before being reclaimed in more recent years. Sometimes people from Mexico City are also called capitalinos.
FP’s Most Read This Week
- Biden’s Team Lied About Gaza. It’s Time to Hold Them Accountable. by Matthew Duss
- The U.S. Can No Longer Stave Off Competition From China by Howard W. French
- Why Trump Keeps Betraying His Base by Stephen M. Walt
In Focus: U.S.-Venezuela Prisoner Swap
Mervin Yamarte, a Venezuelan migrant repatriated from a prison in El Salvador, hugs his daughter upon arrival at his home in Maracaibo, Venezuela, on July 22.Federico Parra/AFP via Getty Images
After months of legal challenges and public criticism over the U.S. expulsion of Venezuelan migrants to El Salvador this year, some 250 detainees were sent to Venezuela last Friday as part of a deal between the three countries.
The United States originally expelled the migrants in March, alleging that they were part of the crime group Tren de Aragua. Lawyers for many of the migrants contested those claims and objected to the fact that they were not given a chance to legally challenge their removals. Reports emerged of severe mistreatment of the detainees imprisoned in El Salvador.
The Trump administration, meanwhile, claimed it had no power to transfer people out of El Salvador. But as part of Friday’s agreement, out of El Salvador the detainees went—though to their native Venezuela rather than back to the United States.
Venezuela also sent 10 detained U.S. citizens and permanent residents to the United States and freed dozens of Venezuelans, including political prisoners, inside the country.
U.S. Secretary of State Marco Rubio and Salvadoran President Nayib Bukele celebrated the freeing of Venezuelan political prisoners. So did Venezuelan civil society activists, even as they called for more transparency. Rights group Foro Penal said Monday that it was able to verify 48 Venezuelans who were freed, short of the 80 that had been announced.
The prisoner swap shows that the United States is maintaining low-profile channels of dialogue with Venezuelan President Nicolás Maduro’s administration—and is willing to use them toward pro-democratic objectives inside the country. That contrasts with Trump’s overwhelming reliance on sanctions to try to encourage regime change during his first term.
Meanwhile, Venezuela said it would open a probe into alleged abuse of detainees imprisoned in El Salvador. Maduro’s government has often been accused of mistreating prisoners in its own jails. But his pledge to investigate Salvadoran prisons is still noteworthy because few Latin American leaders have been openly critical of Bukele’s acceptance of deportees.
Aware of the issue’s importance to Trump, many leaders have preferred to use their political capital elsewhere.