On June 8, the U.S. Department of War added several major Chinese companies with a strong presence in Latin Americaâincluding BYD, Alibaba, and Baiduâto a list of entities it believes support China’s military technology.
âRecent U.S. restrictions targeting Chinese companies with strong ties to Latin America signal a broader focus on ownership structures, technology dependencies, and strategic supply chain control throughout Latin America,â a new Gartner report by analysts Cori Masters and Alejandro Santalo says.
These actions do not create new trade restrictions, change current rules under the United States-Mexico-Canada Agreement (USMCA), or ban the use of these companies’ products and services. Still, this policy signals a broader shift in how U.S. officials view supply chain risks and national security, signaling a wider focus on controlling supply chains across the region.
Redefining transparency in supply chains
In the past, international trade policies and corporate supply chain strategies mainly focused on a product’s country of origin. Key considerations included cost, quality, capacity, and the location of final assembly.
Today, U.S. policymakers take a wider view. They focus on four dimensions of North American manufacturing: Who owns companies, where the money comes from, who controls the technology, and who has access to data.
For business leaders, this new approach means moving away from traditional risk assessment methods. Supply chain risk now extends beyond where products are made. Organizations must also understand who finances expansion, which technologies enable operations, and where operational data resides.
Gartner analyst Cori Masters, co-author of the report on the supply chain impacts of these new policies, told EE Times that companies need to rethink how they oversee their operations.
“Leading organizations are moving beyond traditional supplier mapping into ecosystem mapping,” Masters said in an email exchange. “This includes visibility into ownership structures, investment relationships, technology platforms, logistics networks, and digital infrastructure that support production. The objective is not only to identify exposure to any specific country or company, but to understand where concentrated dependencies exist within the network.â
Latin America as a key reshoring option
Efforts to move manufacturing closer to home have made Latin America a top choice for companies wanting to reduce their reliance on Asian factories. Countries such as Costa Rica, Guatemala, Honduras, El Salvador, Panama, and the Dominican Republic are attracting manufacturers in areas from clothing to advanced technology and life sciences. At the same time, Mexico has become a key manufacturing center in North America for cars, electronics, AI, medical devices, and industrial equipment.
However, the relocation of manufacturing to Latin America has coincided with a surge in Chinese investment. While Canada mostly sees China as a rival, many Latin American governments have welcomed Chinese money to help drive economic growth.
Chinese investment began with commodities and infrastructure, but it has since grown into a fully integrated industrial system in the region. Chinese companies are now part of local manufacturing, mineral extraction, logistics, and telecom networks.
This situation is complicated for companies that moved to Latin America to avoid geopolitical risks. Masters pointed out that while moving manufacturing can help address some logistics issues, it does not fully protect companies from regulatory scrutiny.
“It can reduce certain risks, particularly those associated with transportation distance, lead times, and geographic concentration,” she stated. “However, manufacturing location is only one dimension of resilience. Many production ecosystems remain concentrated through global networks of suppliers, capital, technology providers, and digital platforms. As a result, geographic diversification should not be confused with ecosystem diversification.”
Foreign investment is becoming increasingly worrisome
The 2026 review of the USMCA is underway, and U.S. officials are expected to examine whether key parts of the North American supply chain still depend on Chinese funding, technology, resources, infrastructure, or control.
This concern is not just about making goods in Mexico. It also covers operations in South America, where countries such as Brazil, Chile, Argentina, and Peru have welcomed foreign investment.
Brazil is becoming a top industrial center in the region, especially for electric vehicles, batteries, mining, and energy projects. Companies such as Great Wall Motor, State Grid Corporation of China, and Alibaba Cloud are active there. In Argentina and Chile’s Lithium Triangle, firms such as Ganfeng Lithium Group and Tianqi Lithium play a big role in mining minerals and developing energy storage.
In addition, major shipping routes in Panama and Peru are run by COSCO SHIPPING Lines and Hutchinson Ports. Across Latin America, telecom and digital infrastructure often depend on companies such as Huawei and ZTE.
Because these investments are so closely linked, multinational companies might still be linked to entities subject to U.S. restrictions, even if their direct suppliers are based in the Americas.
The U.S. government now views supply chain strength in these areas as a national security issue and a key to staying competitive worldwide. “Many companies continue to focus on supplier and factory locations while overlooking dependencies embedded within technology platforms, telecommunications infrastructure, cloud environments, industrial investments, and data ecosystems,â Masters emphasized.
Supply chain leaders must adapt to the new order
With new rules tied to the National Defense Authorization Act set to take effect in December 2027, future trade talks will likely focus more on the role of foreign capital and technology in critical supply chains.
Supply chain leaders should prepare for this closer review by identifying where their business depends on government-controlled systems and developing backup options in markets where key revenue relies on a single system.
Even with stricter rules, experts warn against fully cutting ties with global networks. Modern manufacturing is too complex for most companies to operate on their own. Instead, the focus is now on creating more options for how companies run their operations.
“For most organizations, complete separation from any major global technology ecosystem is neither practical nor necessary,” Masters said. “The strategy should be flexibility rather than exclusion. Organizations that develop multiple sourcing options, alternative technology pathways, diversified logistics routes, and qualified production networks will be better positioned to respond to future regulatory, geopolitical, or market changes.”
As governments keep a close watch on who funds, supports, and controls the movement of goods and data, companies will need to update their supply chain strategies to better understand global connections. The recent U.S. actions show that supply chain risk is shaped less by borders and more by the complex web of ownership, investment, and technology that supports modern business.
See also:
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Chinaâs BYD Expands Global Reach with Self-Owned Car Carrier
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Is There Enough Lithium for Massive EV Adoption?
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