Neelam Rahim | neelam@radioislam.co.za

3-minute read
10 November 2024 | 11:45 CAT

As the US prepares for another term under the leadership of Donald Trump, the implications for South Africa’s economy, trade relationships, and political landscape are a topic of considerable debate.

President Donald Trump’s re-election victory sparks discussions on what this could mean for South Africa’s economy, trade agreements, and climate policies. Economists are weighing in on the potential ripple effects of Trump’s America-first approach on emerging markets like South Africa.

In an interview with Radio Islam International, Professor Andre Roux from Stellenbosch Business School highlighted the likely impact of Trump’s protectionist stance. “His focus on American nationalism and protectionism suggests a potential increase in import tariffs, which could strain trade with South Africa and other regions,” Roux explained. The African Growth and Opportunity Act (AGOA), which grants duty-free access to specific African goods to the U.S., may be re-evaluated under Trump’s administration. “The U.S. could remove countries from AGOA’s duty-free list if they’re seen as non-compliant with American policies or human rights standards,” Roux noted.

Economic analysts have raised concerns that Trump’s policies could disrupt trade flows between the U.S. and China, South Africa’s largest trading partner. “A slowing Chinese economy due to trade restrictions could negatively impact Africa, given China’s significant demand for African natural resources,” Roux said, adding that such restrictions might dampen economic growth across the continent.

Professor Roux also pointed out that Trump’s anticipated lower interest rates in the U.S. could attract South African investors to higher-yield markets. “If Trump lowers U.S. rates to make credit more affordable, it might drive capital towards South Africa,” Roux commented. However, he cautioned that risk perceptions surrounding Africa could limit this potential benefit.

Another point of contention is Trump’s stance on climate change. Roux described Trump as “a climate change denialist,” suggesting a rollback on global climate initiatives. “Africa, while contributing the least to climate change, faces high vulnerability to its effects, including droughts and rising sea levels,” he remarked. For Africa, Trump’s approach could hinder long-term climate mitigation efforts, further impacting the continent.

As Trump begins his second term, South African economists and policymakers will closely monitor these unfolding policies, which have significant implications for trade, economic growth, and climate resilience across Africa.

You can listen to the full interview on The Daily Round Up with Moulana Junaid Kharsany and Professor Andre Roux from Stellenbosch Business School here.