Rising interest rates are casting a long shadow on trade and investment decisions across the Americas. Tighter monetary policies – with benchmark rates at multi-year highs – have made borrowing more expensive, which in turn is dampening trade activity. Costlier credit is curbing consumer spending on goods and raising borrowing costs for manufacturers and traders. Trade financing has also been squeezed: global trade finance revenues fell roughly 7% in 2023 as higher rates drove up lending costs, making it harder for especially smaller exporters to get affordable funding. Many firms responded by trimming inventories to reduce interest expenses, contributing to a wave of destocking in 2023. While these defensive moves helped some balance sheets, they also cooled import demand.

On the upside, the same rate hikes have helped tame inflation, providing some stability in input prices and exchange rates. Still, as long as interest rates remain elevated, businesses will likely stay cautious about significant capital and trading decisions, prioritizing cost control and risk management in their international operations.