Colombia and the United States came back from the brink of an all-out trade war on Sunday (January 26), after the South American nation agreed to receive deported immigrants on US military aircraft “without limitation or delay”, a White House statement said.
Colombian President Gustavo Petro had initially refused to let the plane land, decrying US President Donald Trump’s sweeping actions against illegal immigrants. He had also said he would accept repatriated immigrants on “civilian planes, without treating them like criminals”.
However, by late Sunday, Petro had overturned his decision, stating that Colombia was ready to facilitate the “dignified return” of Colombians.
Trump had threatened excessive tariffs on Colombian goods over Petro’s initial stance. Petro had also warned of retaliatory tariffs on US goods. However, with Colombia more dependent on trade with the US than vice-versa, Petro would want to avoid a trade war with Trump. The White House has said that the proposed new tariffs are “fully drafted” and can still be implemented if Colombia does not stick to the agreement.
Let’s take a look at Colombia’s trade with the US.
US-Colombia trade imbalance
The US forms the largest trading partner for Colombia, which exports most of its goods duty free after a US-Colombia Trade Promotion Agreement which came into effect in 2012.
The US imported a whopping $16.1 billion worth of Colombian goods in 2023, according to US government data. However, Colombian trade is a smaller component in the vast US economy. In 2023, Colombia ranked 26th among countries importing to the US.
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The US also has an over $1.5 billion trade surplus with Colombia.
A look at Colombia’s largest exports to the US
According to Reuters, Colombia relied on access to the US market for about a third of its exports or about 4 per cent of its GDP. The largest Colombian exports to the US include crude oil, coffee and cut flowers.
Data provided by The Observatory of Economic Complexity, a repository of world trade data, shows that Colombia’s crude oil imports to the US amounted to $6.05 billion in the year 2022. This made up for just 4 per cent of the total crude oil imports in the US. In contrast, Canada and Mexico made up 60 per cent and 10 per cent of crude oil imports, respectively, that year, per data from the US Energy Information Administration.
Experts, however, have warned that an increase in tariffs would make coffee costlier in the US. Colombia is the second largest supplier of coffee to the US, making up 20 per cent of its imports.
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Colombia is also the largest supplier of cut flowers to the US.
Retaliatory hikes by the Colombian President may also hurt companies in the US, which exported $5.31 billion worth of refined petroleum to the South American nation in 2022. Those exporting corn, which made up over $1 billion of total exports from the US to Colombia in 2022, may also feel the heat.
Other benefits
The US is the largest investment partner for Colombia. The US government states that around 450 American businessmen have invested in projects in Colombia, especially in the manufacturing and mining sectors.
Colombia also relies heavily on the remittance inflows from Colombians working in the US. Remittance refers to the transfer of money from workers to their families back home. In 2024, remittances made up 2.4 per cent of Colombia’s GDP. Data provided by the Colombian government showed that remittances made up 3.6 per cent of the disposable income of families.
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The Migration Data Portal shows that the United States is the largest source of remittances for Colombia. It made up for 30 per cent of remittances, amounting to $3 billion, in Colombia in 2023.
Moreover, Colombia also receives aid from the US to fight drug trafficking and sustain the influx of Venezuelan refugees.
Tariff threat on hold
Trump had threatened to hike tariffs by 25 per cent on Colombian goods, which were to go up by 50 per cent in a week.
Trump had also warned of a travel ban and visa revocations on Colombian government officials and financial sanctions after Petro refused to let deported migrants land in Colombia. Petro, too, had announced retaliatory tariffs of 25 per cent on US imports.
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In a post on X, the Colombian President asserted, “I am informed that you impose a 50% tariff on the fruits of our human labor to enter the United States, and I do the same.” Hitting out at Trump, Petro had said, “I don’t shake hands with white enslaver…”
Hours later, the Colombian government issued another statement, saying it had “overcome the impasse” with the US government, and that it would welcome the deported Colombians.
