Ecuador tries Donald Trump’s tariff recipe on Colombia. And subsidy cuts have been a struggle for Bolivia’s Rodrigo Paz.
ECUADOR
Noboa slaps 30% tariff on Colombian imports
Trends travel fast in the internet era, and even the political arena is not immune to the spread of the latest fad. Ecuadorian President Daniel Noboa proved that this week, surprising observers with the announcement of tariffs for Colombian imports, in a style reminiscent of his US ally, Donald Trump.
Noboa’s justification for the tariffs was mixed, arguing that Colombia is not contributing to the fight against violent drug trafficking groups near the Ecuador border, but also speaking about a bilateral trade deficit.
“We have made real cooperation efforts with Colombia, even though we have a USD 1 billion yearly trade deficit with them. But while we insisted on dialogue, our military continues to fight criminal groups tied to drug trafficking on our border with zero help,” Noboa said.
The president said he would slap a “30% security fee” on Colombian imports starting on February 1, and that levies would continue until Colombia makes a “real effort” to fight cartels and illegal mining.
His announcement shocked analysts, as imports from Colombia kept Ecuador’s electrical grid afloat during a recent energy crisis caused by droughts in the region. Noboa’s government quickly clarified that exceptions would be made for energy and related logistics, as well as other minor line items such as donations.
But Colombia’s response made those exceptions moot, as President Gustavo Petro’s government said it would retaliate by halting all energy exports to Ecuador. Colombia’s energy blockade entered into force immediately, one week before Noboa’s tariffs are scheduled to take effect, and will be accompanied by a 30% tariff on 20 Ecuadorian products.
The tariffs could have a significant economic impact, as Colombia is Ecuador’s third-largest source of imports behind only the US and China. The stakes will rise further if droughts return, as Ecuador would lose bargaining power due to its desperate need for energy.
👉 Why it matters. Despite its concrete effects occurring entirely within South America, the story should also be seen through the lens of US politics. According to Fredy Ceballos, chair of the Ecuador-Colombia Chamber of Commerce, Noboa might have consulted with Trump’s team at the World Economic Forum in Davos, before announcing his decision. Analysts suspect that the Trump administration is using its allies in Ecuador to put pressure on Petro ahead of the Colombian president’s White House meeting next month. The US is pushing for stricter law enforcement against criminal groups in the region, which Petro has generally opposed.
Noboa’s announcement was not the first of its kind. Back in February 2025, Ecuador also slapped 27% tariffs on all imports from Mexico, part of a larger dispute with the country’s left-wing Morena government that also included a controversial raid of the Mexican embassy in Quito. At the time, Noboa also said that he was trying to force Mexico’s hand into signing a free trade agreement with his country.
Though on a much smaller scale, Noboa’s behavior has been similar to Trump’s in many ways, using tariffs as a bargaining chip in border and trade disputes and disregarding international laws that interfered with his objectives.
BOLIVIA
Rodrigo Paz slogs through his initial reform package
While Bolivia’s Movement Towards Socialism (MAS) party navigated its final months in power last year, analysts affirmed that whoever succeeded it would have to address two main economic challenges: the fuel subsidies causing much of the country’s fiscal deficit, and the currency peg that was forcing Bolivia’s foreign sector to operate at huge losses.
Two months after his inauguration, centrist Rodrigo Paz has started to address the former, though not without difficulty, as any cut in subsidies inevitably comes with hikes at the pump — triggering protests from many of the voters that propelled him to the presidency.
The protests against Paz’s subsidy cut were led by the Bolivian Workers’ Center (COB), the country’s largest union group and a MAS ally throughout its two decades in office. Demonstrations were largely concentrated on the western and more MAS-leaning side of the country, and were backed by the most iconic figure in MAS history: three-time former President Evo Morales.
“The lack of debates and transparency about the subsidy cuts is causing social mobilizations and transport strikes in several cities. It is sad to see the government act so arrogantly and irresponsibly.
We always said that a decision of this magnitude should be discussed in front of the people … and that its implementation should be progressive and compensated by [other subsidies],” Morales said on December 19, shortly after Paz’s announcement.
Morales continued to raise his tone as protests escalated, saying on January 8 that “the government is planning to destroy unions and popular organizations so that there is no resistance to his neoliberal policies, under the tutelage of the invader, pirate and plunderer Donald Trump.”
But the sides reached an agreement a few days later, when Paz issued a new decree that replaced his original one. This time, its contents were fully vetted by union leaders, who celebrated the win and thanked authorities for “working on a consensual solution.”
👉 Why it matters. Paz also had a reason to celebrate, as the new decree kept his main proposal intact, including all of the initial subsidy cuts in the revised version. In exchange, the president accepted significant changes to additional reforms that had been included in his original package.
The revised decree kept only 32 articles out of the original 121, leaving out provisions to fast-track regulatory approvals for economic investment, give additional powers to Central Bank authorities, and boost the repatriation of capital into the country’s financial system (in which Bolivians trust less and less).
Paz’s right-wing adversaries criticized the agreement, with runoff loser Jorge Quiroga arguing that “the government promised it would not take one step back, but it ended up taking 89,” a reference to the number of articles eliminated from the decree’s second version. Morales, meanwhile, has remained quiet since the new decree was issued, a sign of a truce between the left and the center.
Markets have so far seen Paz as a moderately stabilizing force, with the Boliviano gaining some value in currency black markets since his election, but still far from its 6.9 official value, a sign that devaluation might still be needed to reach a sustainable exchange rate — a move that would bring further rounds of social conflict.
🔮 Go deeper: Rodrigo Paz buys time while signaling future economic reforms
QUESTION OF THE WEEK
Which Ecuadorian president was ousted from his job after being declared “mentally unfit” to rule?
- Jaime Roldós, in 1981
- Abdalá Bucaram, in 1997
- Rafael Correa, in 2017
- Guillermo Lasso, in 2023
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