The response of tropical ecosystems to elevated carbon dioxide (CO$_2$) remains a critical uncertainty in projections of future climate. Here we investigate how leaf trait plasticity in response to elevated CO$_2$ alters projections of tropical forest competitive dynamics and functioning. We use vegetation demographic model simulations to quantify how plasticity in leaf mass per area and leaf carbon to nitrogen ratio alter the responses of carbon uptake, evapotranspiration, and competitive ability to a doubling of CO$_2$ in a tropical forest. Observationally constrained leaf trait plasticity in response to CO$_2$ fertilization reduces the degree to which tropical tree carbon uptake is affected by a doubling of CO$_2$ (up to -14.7% as compared to a case with no plasticity; 95% confidence interval CI95% -14.4 to -15.0). It also diminishes evapotranspiration (up to -7.0%, CI95% -6.4 to -7.7), and lowers competitive ability in comparison to a tree with no plasticity. Consideration of leaf trait plasticity to elevated CO$_2$ lowers tropical ecosystem carbon uptake and evapotranspirative cooling in the absence of changes in plant type abundance. However, ‘plastic’ responses to high CO$_2$ which maintain higher levels of plant productivity are potentially more competitively advantageous, thus, including changes in plant type abundance may mitigate these decreases in ecosystem functioning. Models that explicitly represent competition between plants with alternative leaf trait plasticity in response to elevated CO$_2$ are needed to capture these influences on tropical forest functioning and large-scale climate.