Key insights
- Ecuador is raising tariffs on Colombian imports to 100% due to alleged border security failures. Colombia has retaliated by halting energy sales. This trade dispute introduces minor negative pressure on global trade sentiment, but its direct impact on US equities is limited given the small scale of the economies involved.
By Alexandra Valencia
QUITO/BOGOTA, April 9 (Reuters) - Ecuador’s government on Thursday said it was raising tariffs on imports from its larger neighbor Colombia to 100% from a prior level of 50%, citing Colombia’s alleged failure to implement border security measures.
"After confirming Colombia’s failure to implement concrete and effective border security measures, Ecuador is compelled to take sovereign action," the government said in a statement.
Ecuador said the tariffs would take effect from May 1.
The South American country had late February raised tariffs to 50%, up from a level of 30% it first imposed at the end of January. It has justified the measures by saying Colombia is not doing enough to fight drug trafficking near the shared border.
Colombia has repeatedly rejected these accusations and noted that it runs regular joint counter-narcotics operations together with Ecuadorean security forces. Its government has levied reciprocal tariffs on some Ecuadorean goods.
Bogota has also halted energy sales to Ecuador, a key export for Ecuador during droughts when hydroelectric dams dry up. Ecuador also imports significant quantities of medicines and pesticides from the neighboring country.
Ecuador’s government has previously cited a trade deficit as a reason for the tariffs.
Neither Colombia’s trade or foreign ministries immediately responded to requests for comment.