Seizing the Opportunity to Realign U.S. Engagement with the Global South
The United States has a critical window to reset its relationship with South American nations, leveraging recent shifts in the critical minerals sector to forge a new paradigm of collaboration. The withdrawal of two major Chinese firms from planned lithium projects in Chile has created a narrow opening for the U.S. to demonstrate a fundamentally different approach to engagement—one based on mutual benefit and strategic partnership, not just filling a void.
China's engagement with Latin America has skyrocketed over the past two decades, transforming it into the region's top trading partner. This financial depth creates profound geopolitical influence, highlighting the urgency for the U.S. to offer a more compelling, comprehensive, and strategic economic alternative.
Total Trade Volume (China-LAC, 2022)
Represents over 25x growth since 2002.
Beyond trade, Beijing's Belt and Road Initiative (BRI) demonstrates the vast scale of their economic statecraft, dwarfing current U.S. development aid efforts. This financial commitment establishes a powerful framework of influence that the U.S. must strategically counter.
Chile, holder of the world's largest lithium reserves, aims to move its industry up the value chain from raw material extraction to advanced manufacturing. This ambition was nearly realized until Chinese firms abruptly withdrew, creating the perfect opportunity for a new partnership model.
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Build domestic battery cathode plants to capture more economic value from its lithium.
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BYD and Tsingshan abandon their multi-million dollar cathode projects, leaving a void.
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A chance to offer a superior, collaborative model that respects Chile's economic goals.
The most effective strategy is not for the U.S. to act alone, but to forge a public-private, trilateral alliance. This model aligns the unique strengths of each partner, creating a powerful and resilient supply chain that serves the mutual interests of all three nations while also repairing key U.S. alliances.
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Provides market access via the U.S.-Chile Free Trade Agreement, development finance to de-risk investment, and strategic alignment with the "One Big Beautiful Bill."
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Brings world-class industrial and technological expertise in battery manufacturing, bridging a critical gap and strengthening a key East Asian alliance.
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Offers the world's largest lithium reserves and a national commitment to moving up the value chain in an environmentally and socially responsible manner.
This partnership directly supports Chile's goal of transcending its role as a mere exporter of raw materials. By building cathode plants domestically, Chile captures significantly more economic value and develops a high-skilled workforce.
Raw Lithium
(Low Value)
Battery Cathodes
(High Value)
This model must consciously break from the legacy of predatory colonial business arrangements, such as those seen in Chile's copper industry. By prioritizing mutual benefit, technology transfer, and respect for national goals, the U.S. can build trust and offer a more equitable path forward.