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Ecuador has slapped 50% tariffs on Colombian imports, threatened to cut electricity sales, and hiked pipeline transit fees by 900%. With $2.8 billion in bilateral trade at risk, Colombian products are getting more expensive and de-escalation talks are just beginning.
Ecuador's state electricity company CELEC has filed a lawsuit in US federal court alleging that Progen, a private contractor, delivered refurbished and non-functional emergency generators under $149 million in contracts while draining the project's bank account to zero. The fraud is directly linked to the 2024 blackout crisis.
Mazar, the critical reservoir feeding Ecuador's largest hydroelectric complex, has fallen to just 22 meters above its operational minimum. With the dry season outlook uncertain, the specter of the 2024 blackouts -- when Ecuadorians lived through 14-hour daily power cuts -- is back on the table.
The European Commission concluded negotiations on a Sustainable Investment Facilitation Agreement (SIFA) with Ecuador -- the EU's first such deal with any Latin American country. The agreement focuses on streamlining investment authorizations, improving transparency, and includes a first-of-its-kind annex on sustainable energy and raw materials.
The UAE and Ecuador signed a Comprehensive Economic Partnership Agreement (CEPA) during the Crown Prince of Abu Dhabi's visit, unlocking over $3 billion in investment across clean energy, digital infrastructure, mining, logistics, and agriculture. Ecuador becomes the fourth Latin American country with a UAE trade deal.
The Banco Central del Ecuador confirmed that GDP grew 3.7% in 2025, pulling the country out of the 2% contraction it suffered in 2024. Growth was driven by exports (+6.4%), investment (+5.6%), and household consumption (+2.7%). The 2026 forecast is a more modest 1.8%.
Colombia has indefinitely suspended electricity exports to Ecuador as part of an escalating trade war. Ecuador normally imports 8-10% of daily demand from Colombia, and replacing that power with costlier generation is running approximately $2 million per day.
Ecuador and Colombia have imposed tit-for-tat tariffs reaching 50% on hundreds of goods, putting approximately $2.8 billion in annual bilateral trade at risk. Colombia has also suspended electricity exports and faces retaliatory pipeline fee increases from Ecuador.
A U.S. Army Corps of Engineers study warns that Coca River erosion could reach the 1,500 MW Coca Codo Sinclair hydroelectric plant's water intake by 2026. The plant provides roughly one-third of Ecuador's national electricity. Recent rains have improved reservoir levels, and a new 200 MW plant has come online.
After devastating blackouts throughout 2024 and into 2025, Ecuador's electricity outlook is the most optimistic in over a year. Heavy rains have refilled major reservoirs, Mazar dam hit maximum capacity, and a new 200 MW plant is online. But risks remain.
Ecuador's Constitutional Court declared the SECA trade agreement with South Korea compliant on March 19. The deal grants tariff-free access for 98.8% of Ecuadorian products and covers investment, technology transfer, energy, and infrastructure cooperation.
Ecuador and the United States signed a bilateral trade agreement on March 18 granting tariff-free access for 53% of Ecuador's non-oil exports, worth $2.786 billion. The deal covers 1,673 tariff subheadings including bananas, shrimp, cocoa, coffee, and flowers.
