Tariff war threatens trade and supply chains between Colombia and Ecuador

Trade relations between Colombia and Ecuador are witnessing a noticeable escalation in light of the imposition ofhigh customs dutieson both sides, which has led to a sharp decline in cross-border trade. With the entry into force of these measures, their repercussions began to appear directly on markets and companies, at a time when fears are increasing that this conflict will turn into a broader economic crisis.

This escalation reflects how trade policies can quickly affect the movement of goods and supply chains, especially in neighboring countries that depend on daily trade, in a trend that has negative repercussions on the Sustainable Development Goals (SDGs), especially with regard to economic growth (Goal 8) and international partnerships (Goal 17).

Hence, disrupting trade reduces employment opportunities, weakens regional cooperation, and increases pressures on local economies. From this standpoint, this article discusses the impact of customs duties on trade between the two countries, and its economic and social repercussions, in addition to the political factors behind this escalation.

Escalation of customs duties between Colombia and Ecuador

Ecuador imposed customs duties of up to 100% on some imports, in a move aimed at addressing the trade deficit with Colombia, while the latter responded by imposing varying duties ranging between 35% and 75% on about 190 Ecuadorian products. This exchange of measures reflects a clear escalation in trade policies, as each party seeks to protect its domestic economy and reduce the negative effects of these measures.

These developments indicate that customs duties are no longer just a regulatory tool, but rather have become a means of economic and political pressure, which in turn leads to a decline in trade between countries to an extent that could completely disrupt trade relations if escalation continues.

A sharp decline in cross-border trade movement

High customs duties have led to a noticeable decline in the movement of goods across the border, especially at the “Rumichaka” International Bridge, which represents a major crossing point between the two countries. After about 150 trucks passed daily, it decreased to a very limited number, which reflects the direct impact of these measures on commercial activity.

This decline reflects a state of almost complete paralysis in the movement of trade, as the cost of transporting goods has become very high, which prompts companies to reduce their operations or search for less expensive alternatives.

The impact of customs duties on companies and exports

Customs duties have disrupted exports between the two countries, with representatives of the trade sector indicating that these measures may lead to an almost complete halt in the flow of goods. This directly affects companies, especially those that depend on neighboring markets to sell their products.

The high costs resulting from these fees reduce the competitiveness of products, which prompts companies to reduce production or redirect their investments towards other markets, which creates additional challenges for the local economy. In light of these increasing pressures on companies, the effects of customs duties extend to broader economic and social dimensions.

Growing economic and social repercussions

In addition to the economic aspect, the effects of customs duties extended to include social repercussions, as representatives of the transportation sector warned that the decline in trade movement may lead to an increase in unemployment rates, especially in border areas that depend heavily on commercial activity.

It is worth noting that the decline in job opportunities may push some individuals to resort to informal activities such as smuggling, reflecting the indirect effects of these policies. This highlights the interconnection between economic policies and social stability, in a context that has negative repercussions on the Sustainable Development Goals (SDGs), especially Goal 8 related to economic growth and decent work, and Goal 1 related to the eradication of poverty, as a decline in economic activity leads to reduced income opportunities and increased living pressures.

Political differences behind the trade escalation

The escalation of customs duties is linked to political disputes between the two countries, as Ecuador justified these measures by the presence of a trade deficit, in addition to accusations related to weak efforts to combat cross-border drug smuggling. On the other hand, Colombia rejected these accusations, considering that the measures imposed were unjustified, which reflects an escalation in political tension between the two sides.

The negative effects of these disputes extend to the path of sustainability, as the decline in cooperation between countries leads to the weakening of regional partnerships, which represent one of the basic pillars of achieving sustainable development. Disrupting trade exchange also limits the efficiency of resource distribution and affects the stability of supply chains, which negatively affects vital sectors such as food and energy.

In this context, political escalation has negative repercussions on the Sustainable Development Goals (SDGs), especially Goal 17 related to partnerships, as a decline in cooperation leads to a reduction in investment opportunities and an increase in uncertainty in the markets. This confirms that the continuation of political conflicts may not only impact bilateral relations, but may also affect economic and social stability more broadly, and hamper efforts to achieve sustainable development in the long term.

In conclusion, the current crisis between Colombia and Ecuador reflects how escalating tariffs can lead to a rapid collapse in trade relations, especially in the absence of negotiated solutions. As this escalation continues, fears remain of worsening economic and social impacts, whether on companies or individuals.

In this context,The Earth Guards Foundation believes that achieving balance in trade policies requires taking into account the economic and social dimensions together, in addition to strengthening dialogue between countries, which contributes to maintaining market stability and supporting sustainable development with its seventeen goals.