September 2025
Secure supply chains for the US run through its closest neighbors By José Manuel Restrepo and Martin Cassinelli
Bottom lines up front
Shipping containers being loaded in PortMiami. TNS/ ABACA via Reuters Connect.
Central America and the Dominican Republic buy more from the United States than they sell to it, and forty percent of US trade flows through the region via the Panama Canal.
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Investing in this trade relationship is worthwhile for the US, and it can use tariff exemptions and a higher annual equity cap for development finance to do so.
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Central America and the Dominican Republic should improve the rule of law and invest in a skilled workforce as they seek to deepen their integration to US supply chains.
Introduction Central America and the Dominican Republic are part of the United States’ immediate neighborhood, an area that has long been viewed primarily through the lens of migration management and development assistance. US engagement in the region has been shaped by concerns over irregular migration, political instability, and humanitarian crises. Yet, this framing overlooks a transformation taking place in recent years: the subregion outperforms Latin America and the Caribbean’s economic growth, has a growing industrial capacity, and hosts an increasingly important infrastructure for the United States. As global economic competition intensifies and the United States seeks to reduce its dependence on China, Central America and the
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ATLANTIC COUNCIL
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Dominican Republic (CA-DR), as an economic hub, warrant reconsideration as vital contributors to US economic security.1 These economic ties not only strengthen US resilience but also stimulate local economies in CA-DR, creating jobs that encourage talent to remain in the region and ease migration pressures
II. Central America and the Dominican Republic can contribute to supply chain resilience The urgency of this reassessment is underscored by the structural vulnerabilities of US economic security revealed in recent years. The COVID-19 pandemic, Russia’s invasion of Ukraine, and increasing geopolitical tensions with China have exposed the risks of concentrated, offshore supply chains. To
Central America is broadly understood in this report as Guatemala, El Salvador, Honduras, Costa Rica, and Panama. Nicaragua is not included, as it is not a promising US partner due to its repressive government that consistently undermines US interests.
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