The Puerto Rico Advantage: Navigating Global Trade Uncertainty for Startup Success

Written by: Jamie Rodota, Senior Portfolio Manager at parallel18 (jamie@parallel18.com)

As the new Trump administration takes shape, founders across industries are bracing for potential policy shifts, particularly around tariffs and trade. While much attention is on U.S.-China relations, Latin American countries — including Mexico, Chile, Argentina, Colombia, and others — are also experiencing new trade scrutiny, which could significantly impact entrepreneurs building cross-border businesses. For global founders, the evolving trade landscape presents both challenges and strategic opportunities — especially for those looking at Puerto Rico.

In a recent article in Entrepreneur, my colleague Héctor Jirau, Ph.D. highlighted how the Trump administration’s approach to trade and tariffs is reshaping the venture landscape, particularly in Latin America. These policy shifts are accelerating the need for resilient business strategies, making Puerto Rico an increasingly attractive hub for founders navigating these challenges. Our friends at Invest Puerto Rico also wrote about this recently, as the island is also becoming an ideal solution for reshoring advanced manufacturing operations.

Why Puerto Rico is in a great position for founders

At Parallel18, we’ve long championed Puerto Rican founders while also welcoming global entrepreneurs through acceleration programs like P18. Over the years, we’ve seen an increasing number of Latin American founders participating in P18, and now, U.S. trade policies could put them at a crossroads. If tariffs on certain countries materialize, many startups exporting to the U.S. or operating in global supply chains will face cost increases and operational uncertainty.

Puerto Rico, however, offers a unique alternative — one that keeps companies within the U.S. legal and financial system while providing insulation from potential tariffs. Some advantages to consider:

• U.S. Territory, No Tariffs: Puerto Rico is part of the U.S., meaning companies based here are not subject to the same trade restrictions as foreign countries.
• Business Incentives: Puerto Rico’s tax incentives, including tax credits and exemptions for startups that establish operations here.
• Proximity to Latin America: With a rich Latin American culture, Puerto Rico provides a familiar environment for Spanish-speaking founders while offering direct access to U.S. markets.
• Infrastructure and Talent: The island is home to a growing community of tech talent, and a rising interest in AI, logistics, and supply chain innovation.

For Latin American entrepreneurs, relocating to Puerto Rico could be a strategic move, ensuring business continuity while maintaining low-cost access to the world’s largest economy.

Political & Economic Tailwinds Favoring Puerto Rico

Beyond trade policy, global shifts in supply chain resilience, defense innovation, and logistics infrastructure are aligning in ways that position Puerto Rico as a critical hub. As highlighted in recent investment theses, several key sectors stand to benefit:

Logistics & Maritime Infrastructure

While the Caribbean already plays a critical role in global shipping, a major U.S.-controlled transshipment hub does not currently exist. The Port of Ponce has emerged as a leading candidate for a major logistics investment, potentially positioning Puerto Rico as a critical gateway for shipping between the U.S., Latin America, and the world. This opens doors for startups working on shipping efficiency, cargo tracking, and autonomous port management technologies. This is particularly important as trade negotiations and tensions escalate around the Panama Canal.

National Security and Defense Tech

Recent geopolitical tensions — including Venezuelan President Nicolas Maduro’s rhetoric about “liberating” Puerto Rico — underscore the island’s strategic importance to U.S. national security, especially in the Caribbean. The defense tech sector is seeing rapid growth, with companies like Anduril securing major funding rounds for next-gen undersea and autonomous defense systems. Puerto Rico’s location makes it an ideal proving ground for defense startups developing maritime, drone, and surveillance technologies tailored to the Caribbean and Latin America.

Food Security and Localized Production

Puerto Rico imports nearly 85% of its food, making supply chain disruptions particularly impactful. With tariffs on agricultural goods a looming possibility, there is an urgent need to strengthen local food production. Local entrepreneurs are already innovating in agritech, controlled environment farming, and sustainable supply chains. For example, PRoduce is an app that connects local growers with consumers, helping with logistics of food distribution and reducing food import dependency.

Supply Chain and Trade Innovation

Startups tackling supply chain challenges — whether through better visibility tools, AI-driven logistics optimization, or cross-border compliance software — will have a growing market in the wake of geopolitical uncertainty. Puerto Rico’s strategic location makes it a natural testing ground for new logistics models, particularly given its reliance on imports and the growing push for local manufacturing.

The Bottom Line for Founders

With global trade in flux, Puerto Rico presents a unique and timely opportunity for you to establish operations in a U.S. jurisdiction that provides access to American markets while maintaining strong ties to Latin America. Whether you are mitigating tariff risks, addressing supply chain disruptions, or aligning with national security priorities, setting up in Puerto Rico can provide both economic advantages and strategic resilience.

At parallel18, we are looking for startups that are either facing these challenges or are working on solutions that are propelled by these tailwinds. If you’re an entrepreneur navigating these shifts, message me to explore how parallel18 or our new VCAP fund can support your growth.

Now is the time to assess whether Puerto Rico’s evolving role in global trade and security aligns with your growth ambitions. As Héctor noted, these geopolitical shifts are shaping the future of venture investment — let’s ensure you’re positioned to capitalize on them.