The increase in US deportations and the potential closure of the US Agency for International Development (USAID) will send shockwaves through Central America’s economies. This will interrupt programs focused on reducing unemployment, violence, and corruption, fomenting more migration. What can Central American leaders do to confront this situation?
What’s at stake for Central America?
Trump’s policies toward Central America directly impact many factors that foment migration. Unemployment, poverty, and violence in Central America primarily affect women and youth. In recent years, they represent the majority of migrants.
The deportations of Central American citizens will also have a severe impact. In 2024, Guatemala received 7 or 8 flights with deportees a week; the number is expected to increase to 9 to 11, calculated to reach 92,000 people a year. This will generate a sudden increase in the labor force in countries lacking economic opportunities. The Central American unemployment rate in 2023 was around 7%, but precarious labor conditions.
The increased deportations will reduce remittances from the United States. According to the World Bank, in 2022, remittances represented 19% of Guatemala’s GDP and more than a quarter of Honduras’ GDP. Even if the reduction in remittances is not significant, their weight on the GDP is disproportional. They represent a substantial part of the spending for food, health, basic services, and education of many people. For Central America’s poorest 20 percent, almost 50% of their income comes from remittances.
This negative cycle of the Trump policies is closed with the closure of the programs from USAID. These programs are not only financial resources but also sources of technical knowledge and have helped improve the capacity of the countries in the region.
Even though these policies implemented by the United States worry Central Americans, they are not new. During Trump’s first term, the region lived the effects of reductions of technical and economic support, and one of the most significant impacts was the closing of the CICIG and MACCHI, organizations that worked effectively to dismantle corruption networks in Guatemala and Honduras. The elimination of this organization was a push to allow corruption to continue to suck economic resources from these countries.
Who will fill the gaps?
In this context, the Central American leaders must consider the possibility of getting close to new allies. However, can the increase in trade with other nations activate the economy and replace the income generated by remittances? What are the real alternatives to aid from the US?
China is an alternative because of its geopolitical and economic interests in the region. However, Central America does not have the natural resources of hydrocarbons and minerals that have attracted China to South America. Additionally, Guatemala and Belize support Taiwan, nullifying any possibility of establishing a relationship with China. Meanwhile, the commercial ties with Nicaragua and the Asian power are strong, and the relationships with Honduras and El Salvador are slowly developing. However, from the Central American perspective, the alignment with China could be a double-edged sword, as it could unleash the anger of the US president, triggering an increase in the tariffs of export products to the US.
Other relevant partners in the future are the EU and India, but their influence is still limited, and no substantial changes are expected in the medium term.
The internation cooperation is another fundamental factor for the region. The agencies for cooperation are from the EU, Japan, and Taiwan, which are equivalent to USAID, and are present in the area, but their work is focused on different topics. The European Commission is focused on humanitarian aid, disaster preparedness and relief, and epidemic responses (dengue), while the national agencies, like the Cooperación Española, work on education and regional integration and the GIZ from Germany focus on the region is on good governance, human rights, environment, and economic sustainability. The JICA from Japan, among other topics, aids in economic integration, conservation of natural resources, and agricultural development, and the ICDF of Taiwan, which only works in Guatemala and Belize, focuses on health, transport, education, and agricultural projects.
While these programs are essential, their volume is not comparable to that of the government of the United States. While the European Union 2024 gave US$31 million to Central America and Mexico, in the US, the line for aid to Central America in the 2025 budget proposal was US$638 million. Therefore, it will not be easy for Central American countries to substitute the potential cuts imposed by Donald Trump’s administration in the region quickly.
In conclusion, the stress caused by the reduction in assistance, the contraction of remittances, and the sudden increase in the population will push Central American countries to seek new solutions. In the short and medium term, alliances between governments and the private sector and the participation of other aid agencies might help.
However, the Central American leaders must begin forming new commercial alliances to enhance living conditions in their countries over the long term, without relying on the fluctuations of Northern power. They should also remind the Trump administration of the factors driving Central American migration to their country.
Autor
Master of Arts in Ecology and Evolutionary Biology and a Master of Arts in Anthropology. PhD student in Latin American Studies at Tulane University.
