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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.
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 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.
Gasoline and diesel prices in Ecuador are expected to increase approximately 5% when the monthly band adjustment takes effect on April 12. Extra and ecopais gasoline currently at $2.89/gallon and diesel premium at $2.82/gallon are being pushed higher by WTI crude above $100/barrel.
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.
Ecuador's grid operator CENACE has ordered businesses to self-generate electricity from 9 AM to 11 PM on weekdays since March 17. The Coca Codo Sinclair dam is operating at 37% capacity, and Colombia has suspended 450 MW in electricity exports.
Ecuador and Colombia have imposed 50% tariffs on each other's imports in an escalating trade war that puts $2.8 billion in bilateral trade at risk. Colombia has also suspended electricity exports and raised pipeline fees by 900%.
Ecuador remains 50-70% cheaper than the United States in 2026, but inflation and the Colombia trade war are nudging some prices higher. Here are the latest monthly budgets, healthcare costs, and price benchmarks for expats in Cuenca, Quito, and the coast.
President Noboa's executive decree MDT.2026-059 allows employers to schedule 10-hour workdays within the existing 40-hour weekly cap. Unions were not consulted, and mass protests erupted on March 13 in Quito and Guayaquil. Noboa's approval rating has dropped to 38%.
Relations between Ecuador and Colombia have deteriorated sharply in March 2026. Ecuador raised tariffs to 50% on Colombian goods on March 1, Colombia retaliated with tariffs on 280 products, and President Petro has accused Ecuador of bombing Colombian territory. $2.8 billion in annual bilateral trade hangs in the balance.
