I wrote this essay before Donald Trump announced that the US would cut all future funding directed at South Africa. I think that knee-jerk announcement proves the very point I make below.
The other day I asked a senior South African economic policymaker whether they had thought about how to price Donald Trump’s presidency in their modelling assumptions. I asked the question because the then incoming US president had no discernible agenda, just grievance, revenge and emotional validation for the multitudes with innumerable grievances.
“No. We are flabbergasted. Even my counterparts globally face the same problem,” he said. I don’t think he has escaped his conundrum. Instead, I think it has deepened. The Trump presidency is and will be characterised by unpredictability – a terrible thing for investment and policy planning.
Trump’s breathless White House spokesperson announced last week that he would impose tariffs on all goods from neighbouring Mexico and Canada, both members of the North American Free Trade Agreement. Third on the list of the damned is China, the Asian behemoth that will not and cannot be bullied, not by the US or anyone else. Each on its own is a major trading partner of the US, with trillions of US dollars in trade between them.
The tariffs are punishment, Trump says, for the amount of drugs imported into the US from either country. It’s the first time I hear of tariffs being imposed for a reason totally unconnected to trade, but here we are.
US-SA ties are deep
Some in South Africa, especially on social media, have been commenting on the goings on in “America” with a level of glee and amusement. There are even those who praise Trump as a politician who “keeps his promises” and were very excited by a raft of executive orders he issued as soon as he was sworn into office. I could only grimace, for the impulsive, vindictive behaviour would soon affect Africa in general, and South Africa in particular.
Ties between South Africa and the US run very deep, mostly because it is a mainly English-speaking country. These ties cut across culture, trade and politics – and are formalised by the diplomatic relations between the two countries. Trump has upended all of that, and his presidency will be a very rough ride for nearly every country in the world.
If Trump can impose punitive tariffs on Canada, the US’s northern neighbour which has joined almost every major US war effort in the past, then why would South Africans find reason to laugh and not care, if not for negligence and ignorance?
One of the promises Trump “kept” was to gut foreign aid as part of his “America First” agenda. And so, a memo announcing this step had the impact of immediately halting funding for the Presidential Emergency Plan for Aids Relief (Pepfar).
In South Africa, 40% of funding towards Aids programmes emanates from Pepfar, invested in more than 1,250 community-based organisations that employ more than 15,000 people. In one fell swoop these organisations were told that the funding would no longer become available.
He also promised to assert the US’s will on other countries by imposing tariffs on all imports – to the extent of threatening a 100% tariff on goods from Brics member nations. Please don’t expect much of this to make complete sense because it probably doesn’t make too much sense to him either. Current tariffs on Chinese imports, effective as of February 4 2025 are 10%. I suppose the remaining 90% will be imposed later under a different regime.
For its part, following the first round of US tariffs, China has found replacement markets for $690bn worth of exports. It is feverishly working to find replacements for pretty much everything else, if it can.
And that is the nub of my point. It is not enough to complain and say, “the US is a bully”, or “Trump is unhinged”, or “they hate us because they are imperialist”. Nothing any of us says will make any difference. It’s what we do proactively for ourselves that matters.
My worry is that we, South Africa, have no plan for the Trump administration. None whatsoever.
In 2023 South Africa exported $8.32bn in goods and services. Tariffs would not only increase prices in the US but lead to a fall in production here – which may affect jobs and local taxes. In other words, damage is done on both sides. Just as Americans will find replacement sources of the same goods, if they can, we must find replacement markets or take the full force of the tariff imposition in the way Trump would envisage.
Fortunately, there is no tariff imposed on South African goods yet, and one would argue there is no basis for any imposition of tariffs. But that hardly matters now. As I said earlier, there does not appear to be any rational connection between the tariff decision and the outcome desired, so tariffs can be imposed for any reason depending on what mood Trump is in that day. He may even do it by tweet!
And herein lies the difficulty of pricing the meaning of a Trump presidency from a policy point of view. According to the Business Times of February 2, the South African Reserve Bank has run models based on 10% tariff assumption and a resultant trade war – and found that this would increase inflation to 5%. The rand would likely trade at R21 to the dollar (currently it is about R18.65/$).
I don’t have to tell South Africans what a weaker rand does to our cost of living, beginning with the impact on the price of fuel.
So it’s not funny
As much as some may feel amused, even pleased that the US is about to experience serious problems, this is no reason to celebrate, no matter how one feels about US foreign and related policy. An imperial behemoth like the US never suffers alone, while the countries related to it through trade have varying degrees of resilience.
The Chinese have deep pockets and tools with which to retaliate. We don’t. And, no, we can’t hope it doesn’t happen either. Hope is not a strategy.
So, what should we do? First is to accept where we are most vulnerable. Mining and precious metals may be able to withstand tariffs overall, but the auto industry would not. We export well over $2.9bn in automotive products each year. Thousands of jobs are linked to that programme.
This means we must prepare for scenarios where those factories may have to drastically reduce production and lay off workers. We must think about the conversations we must have already with carmakers to build resilience and find ways in which we can help them lower input costs or find new markets should we be affected by a US tariff decision.
A new world
Donald Trump is unlike any US president we have encountered in the modern era. The assumptions, accurate or wild, that various South African actors have made about the US have gone out of the window. It will not assist us to deal with the state of the US if any of us believe that we have that trusted old friend – predictability.
On the diplomatic front it means Ebrahim Rasool, South Africa’s ambassador to the US, will have a hard time working the committees and powerful lobby groups, not to present us as a weakling, but to avert disaster.
We must not be caught napping.
Top image: US President Donald Trump. Picture: Bill Pugliano/Getty Images.
Songezo Zibi is a member of the South African parliament, where he is chair of the standing committee on public accounts; the national leader of Rise Mzansi; and an author of various books on politics, economy and history. Songezo’s corporate career spanned more than two decades in car manufacturing, mining, banking as well as being editor of Business Day. This article is republished from his Substack with permission.
Sign up to Currency’s weekly newsletters to receive your own bulletin of weekday news and weekend treats. Register here.