To Understand Trump’s America, Look South
By Adam Ratzlaff
A former president with a populist streak and a complicated history with democracy is reelected on the promise to return the country to its former glory, promising vengeance on those who have undermined the nation since he left office. While the United States may see this scenario describing Donald Trump’s second term as unprecedented, analysts who study Latin America will find the story strikingly familiar.
Although many have compared Trump’s rhetoric and leadership style to Latin America’s past caudillos, the parallels run deeper. The United States’ political and social structures have noticeable similarities to those in Latin America.
The United States’ underlying structures more closely match those in Latin America than other countries belonging to the Organization for Economic Cooperation and Development (OECD), and both businesses and political observers should make comparisons accordingly. Companies interested in investing in the US need to better understand the political and social risks that a second Trump term may entail. Learning from the Latin American experience is critical to understanding these challenges, as well as identifying opportunities.
American Not-So Exceptionalism
The US is often analyzed as having its own unique system. We see this in a number of different ways, ranging from the general lack of political risk analysis that researchers conduct on the country to “American” politics being treated as a separate field of political science from comparative politics. This division is fueled by the myth of “American exceptionalism,” or the idea that the US is unique.
However, Latin America-focused analysts see clear parallels in countries’ political and economic structures across the Americas. Indeed, even the foundational premise of American exceptionalism — that a revolution fought against a monarchy to specifically create a democracy instead of a different type of society — is shared by many Latin American nations.
These parallels highlight why analyzing the US through the lens of the Americas provides a better understanding of both Trump and the country more broadly, and can help paint a clearer picture of the challenges and opportunities that companies face in investing in this climate.
The US and Latin American nations have presidential systems that create their own sets of unique challenges and logic. One central feature of presidential systems is that they do not require the chief executive to have the support of the legislature. This can lead to political gridlock. In turn, this can result in declining support for democracy and trust in the political system — a phenomenon that is evident in both the US and Latin America.
Without an appropriate relief valve, leaders may air out these frustrations by turning to undemocratic methods to achieve their ends — often with the support of the people. We have seen this happen in various Latin American contexts. For example, in 2020 El Salvador’s President Nayib Bukele marched the military into Congress to help ensure lawmakers would pass his legislative agenda. Peru’s Alberto Fujimori also popularized the term “self-coup” when he closed the legislature to pursue his agenda — an action that former Peruvian President Pedro Castillo tried to replicate in 2022.
These types of cases are why scholars often point to presidential systems as inherently more fragile for democracy than parliamentary systems. With Trump potentially facing an uphill battle in the 2026 midterm elections as he promises to shake up the status quo, understanding how these events unfolded and the ensuing political and economic fallout is crucial for understanding political risk in the US context.
Presidential systems are not the only structural similarity between the US and Latin America. While economists often consider Latin America the most unequal region in the world, the US also faces high levels of inequality. Countries across Latin America are more unequal than most developed OECD countries — except for the US. Instead, inequality in the US closely mirrors what is seen in Latin America.
When comparing OECD countries’ measures of inequality using the commonly used Gini coefficient, the US has the second-highest level in the group after Turkey when excluding the organization’s Latin American members. However, when comparing US inequality against that of Latin American countries, the measure looks much more similar.
These inequalities are exacerbated by ethnoracial disparities across the Americas. While some Latin American countries historically claimed to be “racial democracies” and say they have eliminated discrimination, studies consistently show high levels of racial inequality. Unlike other OECD countries, US fiscal policy has a relatively small impact on market-based income inequalities — a trend also evident in Latin America.
Income Inequality in the Americas and OECD
Frustrations with the political system, high levels of inequality, and growing expectations have led to a rapid rise in political polarization in countries across the Americas. While this was not a major challenge in the US for much of the 20th century, political polarization across most countries in the Americas has climbed rapidly since the turn of the 21st century. Now, US levels of political polarization parallel those seen in Latin America.
Undemocratic actors have often taken advantage of periods of high political polarization, whether to concentrate power in the executive branch at the expense of liberal democratic norms or to justify the military taking control of the state. While military coups have become significantly less common in Latin America, democratic erosion and the concentration of power in many countries persists. Indeed, assaults on Venezuelan democracy by President Nicolás Maduro and his predecessor Hugo Chávez did not push the country immediately into authoritarianism. Instead, these regimes stacked the courts, removed barriers to presidential power, and leveraged state power to eliminate political rivals over time until the country fell into authoritarianism. Understanding the political and economic implications of high levels of polarization is critical to making informed decisions.
Political Polarization, 1923-2023
Within the US, pundits and analysts were shocked by Trump’s rise and return to the presidency. However, in this political and economic landscape, it should come as little surprise that Trump’s rhetoric and policies echo those of countries with similar conditions. Indeed, while “unprecedented” became a popular refrain during Trump’s 2016 electoral campaign and throughout his first administration, many of Trump’s policies and rhetoric mirror policies of populist leaders from across Latin America — albeit with a US twist.
Populism and the Rule of Law
High levels of inequality, presidential systems, and high levels of polarization are ingredients that welcome the rise of populist leaders and provide fertile ground for the erosion of the rule of law. Populist leaders across the Americas have relied on similar strategies to take power and — once they seized it — used similar tactics to undermine democratic norms.
Several Latin American populist leaders have sought to shape political parties into their own image — even if not ideologically coherent. A classic example is Argentina’s former president Juan Perón, whose political legacy extends well beyond his tenure as president in the mid-20th century and whose political parties remain relevant today. More recently, we have seen leaders including Venezuela’s Hugo Chávez, Bolivia’s Evo Morales, Ecuador’s Rafael Correa, and Mexico’s Andrés Manuel López Obrador create political parties that have outlasted them. In some cases, unlikely political bedfellows have joined the same party to support a charismatic leader. For instance, Brazil’s Getúlio Vargas created political parties that earned him the nicknames the “Father of the Poor” and the “Mother of the Rich.”
While the US bipartisan system is less likely to fracture due to its winner-take-all election model, Trump has turned the Republican Party into a cult of personality that demands personal loyalty. This creates a system in which decisions are based on the whims of leaders rather than on broad political interests, generating risks for companies and individuals that run afoul of the president. Following the 2024 election, we have already seen Trump’s political opponents and various corporate leaders seek to get back in his good graces.
Once in power, Latin America’s undemocratic leaders have also taken a particular approach to concentrating power within the executive — one that often undermines democratic norms and the rule of law. One popular strategy has been to attack the media, which has happened in Venezuela, Guatemala, and other countries. In the lead-up to the 2023 elections in Guatemala, the Alejandro Giammattei government pushed newspaper elPeriódico out of business, limiting voices critical of the government. This tactic allows leaders to develop unified messages and control public discourse. Media organizations worried about blowback from populist leaders may also self-censor information that is critical of the president or of their policies.
In the US, Trump has shown his influence in trying to control media outlets whose coverage he dislikes. While Trump was a vocal critic of the media during his first term, he has publicly expressed his intent to move beyond rhetoric by starting to threaten media licenses. Additionally, Meta’s recent decision to eliminate fact-checking already shows how companies are shifting their policies to reduce their own risks.
Another potential Trump strategy that takes a page out of Latin American politics is using the legal system against rivals. Trump has voiced his desire to leverage the US Justice Department to go after political opponents. The Supreme Court — which Trump appointed three members to during his last administration — has largely granted him presidential immunity.
As Peruvian General Óscar Benavides once notoriously noted: “For my friends, everything; for my enemies, the law.” Latin American history has been replete with leaders who have used legal structures to go after their political enemies. This ranges from leveraging impeachment processes such as those against Dilma Rousseff in Brazil to weaponizing corruption charges against political opponents.
These concerns are even greater in cases where incumbent presidents have been able to stack the courts, which has happened in several countries across the region. This includes Bolivia, where Evo Morales was able to fill the court with loyalists that permitted his unconstitutional 2019 presidential bid.
With Trump’s claims, US businesses and organizations must understand how actors could operate within this legal context.
The Protectionist State
In recent years, Trump has epitomized the striking reversal in US preferences toward trade liberalization. While this may be a new trend for the contemporary US, there is a long history of trade protectionism as a development strategy in countries across Latin America.
While countries have a long history of using trade policy and tariffs for both development and national security purposes, Latin America’s intellectual and economic history is filled with examples of using trade policy as a tool to promote economic industrialization. The United Nations Economic Commission for Latin America and the Caribbean (CEPAL for its Spanish acronym) was an early proponent of leveraging tariffs to promote industrialization. This model came to be known as Import Substitution Industrialization (ISI). Scholars at CEPAL included the likes of Raúl Prebisch and Fernando Henrique Cardoso, who would go on to become president of Brazil.
Cardoso’s work on dependency theory — an important intellectual underpinning of ISI — contended that domestic elites benefitted from underdevelopment and created systems in which Latin American countries were locked into commodity exports. While Trump’s own economic vision is a far cry from dependency theory, he also blames elites for the state of US manufacturing and seeks to use tariffs to reindustrialize the US by reducing dependency on foreign exports — a model eerily similar to ISI.
Throughout the Cold War, several countries in Latin America — including Brazil, Argentina, and others — implemented ISI as a development model. While this model did support the industrialization of some key companies and sectors in the region, such as Brazil’s airline industry, it also resulted in high prices of goods and concerns that some Latin American companies could not compete with global competitors.
As businesses and pundits seek to understand the implications of Trump’s tariffs on the US economy and investment climate, they can learn critical lessons by looking at the Latin American experience with ISI. These include creating challenges for the global competitiveness of US goods, retaliatory tariffs from other markets, and the rising cost of inputs for key goods.
Analyzing the US as Part of the Americas
While Trump’s leadership style and policies alone may be enough to warrant comparisons between the US and Latin America, the underlying political, economic, and social dynamics across the Americas — including the US — also have striking parallels.
This could lead to opportunities for policymakers to collaborate on identifying solutions to shared problems. However, it also means that the political and economic uncertainty that concerns investors in Latin America is relevant when considering US investments. High levels of inequality, risks of protectionism, and declining rule of law could impact investment decisions. While the US has traditionally been viewed as a safe haven for investment, the political and economic landscape is more fraught than in the past.
Rather than trying to understand the US as an exceptional case, analysts and companies must understand the parallels with Latin America. Not only are the underlying social and political conditions familiar, but so are the methods that Trump and other politicians use to operate within this framework. Understanding this dynamic reveals similar patterns in both places, including the rise of populist rhetoric, shifts in preferences surrounding trade, and the erosion of the rule of law.
Attempting to analyze Trump as an “unprecedented” case or as an aberration will likely lead to poor investment choices and short-term decision-making. While no individual leader or country will directly mirror what a second Trump term will look like, those that recognize the parallels between the US and Latin America will be uniquely equipped to explain US policy and business dynamics.
Adam Ratzlaff is a specialist and consultant in Inter-American affairs as well as a member of Diplomatic Courier’s World in 2050 Brain Trust. He has previously worked with the World Bank, the Inter-American Development Bank, and Global Americans, among other groups.
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