The United States' trade relationship with Colombia is currently in a state of flux due to new tariff policies implemented by the Trump administration, despite an existing Free Trade Agreement (FTA) between the two countries.

Tariffs Update:

• 10% Baseline Tariff: Effective April 5, 2025, a 10% tariff was imposed on products exported from Colombia to the US. This is part of a broader "reciprocal" tariff policy enacted by the US to address trade deficits.

• Previous Threats & Rescissions: Earlier in 2025, there was a threat of a 25% tariff on all Colombian goods, which could have escalated to 50%, particularly in retaliation for Colombia's initial refusal to accept deported Colombian citizens from the US. However, Colombia ultimately accepted the deportees, and these higher tariffs were rescinded.

• August 1, 2025 Deadline: While the 10% baseline tariff is in effect, the Trump administration has extended a pause on higher, country-specific reciprocal tariffs until August 1, 2025. Bilateral negotiations are ongoing, and the final rates for some countries will be determined by then. It's unclear if Colombia will face a higher rate than the 10% baseline after this deadline, but countries that do not reach agreements may face increased tariffs.

• Potential for Retaliation: The US has stated that if any trading partner retaliates against the US with import duties on US exports, the scope of the tariffs imposed by the US may be increased or expanded.

Status of Deals and Agreements:

• US-Colombia Trade Promotion Agreement (TPA): The long-standing FTA (in force since 2012) aims to eliminate tariffs and other trade barriers. However, the current US tariff policies are being applied in addition to any existing duties under the TPA. It is "likely that exports from Colombia to the US, covered by the Free Trade Agreement between the two countries, will not be exempt from the 10% tariff."

• Renegotiation Efforts: The Colombian government, under President Gustavo Petro, has expressed a strong desire to renegotiate the TPA, arguing that it has led to unfair competition for Colombian products, especially agricultural ones, and has hindered the growth of the Colombian economy. The Free Trade Commission (FTC) of the TPA has been actively involved, with the US and Colombia issuing a reinterpretation of investment protection standards in January 2025. While there's a push for renegotiation from Colombia, opening the TPA to full renegotiation is unlikely to move forward in the US Congress. Instead, adjustments are more likely to occur through the FTC.

Impact on Companies:

• Colombian Exporters: The 10% tariff is already impacting Colombian exports to the US. A study by the Colombian American Chamber of Commerce (AmCham Colombia) indicates that about 18% of Colombia's exports to the U.S. are significantly affected, potentially leading to an 8% drop in overall exports. However, some Colombian products, like electrical materials, textiles and apparel, and sugar and confectionary, may see opportunities due to higher tariffs on competitors like China. Flowers, coffee, aluminum, plastics, and processed fruit and vegetable products are also notable Colombian exports.

• US Exporters: Colombia remains a crucial market for US agricultural producers, with over $1 billion in annual sales of yellow and white corn. Exports of soybeans, wheat, rice, cotton, and various fruits and processed livestock products could be severely impacted if trade relations worsen. US companies that rely on imports from Colombia for inputs, particularly in protein production (eggs, chicken, pork, fish), could face higher costs due to increased prices of imported goods.

• Affected Sectors: Companies in sectors like oil, cut flowers, and coffee (Colombian exports) and corn, soybeans, and other agricultural products (US exports to Colombia) are particularly susceptible to these new tariffs and any further trade escalations.

• Broader Economic Impact: The tariffs could contribute to higher inflation in Colombia and negatively affect its economic growth. For US companies, the uncertainty surrounding trade rules due to the ongoing negotiations and potential for further tariff increases can delay investment, contracts, and hiring decisions.

The situation remains dynamic, with ongoing negotiations and the possibility of further adjustments to tariff rates as the August 1 deadline approaches.