Kim Heller
The tariff war of the United States President, Donald Trump, is merciless. For many doomsayers it is apocalyptic. While the new tariff regiment could bullet economies across the globe, it is also possible that the very rupture of global trade dynamics could sprout new economic shoots across the world.
Trump’s tariffs appear to be geared towards protecting and strengthening the US economy and reducing the country’s trade deficit, even if this is at the expense of others. If nations across the globe reject this new economic order and seek new trade partnerships, this could sideline rather than super-size the US’s global might and influence.
In time, this new reconfiguration could threaten the economic hegemony of the United States. But for now, countries reliant on United States trade should prepare for hard times. In Southern African Development Community (SADC) countries where ninety per cent of all trade is with foreign nations, the impact will be harsh.
South Africa, Lesotho, Botswana, Angola, Madagascar, and Mauritius, which are being subjected to extremely high tariffs will be hardest hit. Additionally, Trump's tariffs nullify trade advantages that sub-Saharan African countries have long benefitted from under the African Growth and Opportunity Act (Agoa).
Despite SADC’s highly prized geo-strategic location and the treasured mineral wealth of its member states, the region is a minor player on the world stage. World Data statistics show that SADC, which comprises sixteen member states, accounts for less than one per cent of global GDP, and just over one per cent of global exports.
The underdevelopment and lack of diversity of the SADC economy have been exacerbated by structural dependencies on the US and other foreign nations. For now, the tariffs are on hold for 90 days. SADC must use this reprieve to mitigate the regional economic and political consequences and reset geo-economic and developmental coordinates for a different trade and growth trajectory.
SADC is not short of strategic plans or intent. Boosting trade capacity, industrialisation, economic diversification, and intra-regional trade sit at the heart of its Regional Indicative Strategic Development Plan 2020-2030. The Free Trade Area and Protocol on Trade agreements provide tangible opportunities for tariff-free trade among member states. Yet patterns of foreign trade trump local trade.
For now, SADC’s intra-regional trade stands at just 23%.Tangible unevenness in developmental levels, power relations and economic muscle as well as divergence in terms of financial pressures and priorities across member states hampers collaboration around equitable growth and trade. According to 2023 statistics from the Observatory of Economic Complexity, South Africa accounted for approximately two-thirds of SADC’s total exports for the year and 45% of intra-SADC trade.
South Africa's strong economy sits alongside poor economies with low influence or purchasing power. This divergence creates disunity of purpose and undermines regional cooperation. This makes equitable growth and trade difficult. The new tariff predicament could reduce SADC’s reliance on South Africa as a major regional trade partner. This move is more likely to be a factor of reconfiguration and diversification of export markets rather than steered by US disgruntlement with South Africa or intentional coercion against South Africa.
The different tariff rates imposed on SADC countries present a challenge to the Southern African Customs Union (SACU). Coming up with a common and united stance will be no easy feat. This will be complicated further given that several SADC member states participate in both SACU and other trade blocs.
Despite the Free Trade Area agreement, many goods are nonetheless subjected to tariffs. Not all member states abide by the Free Trade Area provisions. Slow custom machinery, poor road and railway infrastructure, cumbersome border logistics, and inefficient value chains add to the difficulties. International trade is often less burdensome and less costly than intra-regional trade. Strong regional collaboration could come second to country-specific or continental-wide prioritisation.
The African Continental Free Trade Area (AfCFTA) which affords broader market access may overshadow regional trade initiatives. Trump's tariffs allow SADC to unite but fragmentation may be the more likely outcome given regional divisions, and economic divergencies. If SADC and SACU pursue and present a united front, it could strengthen the region’s negotiation mettle and economic influence.
SADC discourages unilateralism on tariffs in negotiations with external partners. Historically, SACU has negotiated tariffs collectively, but it appears that this time individual countries are self-navigating. This is despite an upcoming meeting of the Southern African Customs Union’s trade ministers. Kenya has sent a delegation to Washington. Madagascar is already in talks with US authorities. South Africa has expressed its intent to pursue a bilateral trade agreement with the US. Lesotho is trying to win back US favour by offering a stake in the building of power generators. Zimbabwe appears to be pleading rather than negotiating and swiftly announced that it will suspend tariffs on goods it imports from the U.S.
The African Continental Free Trade Area agreement provides SADC member states with a promising alternative to the US market. A concerted effort to broaden and boost trade across the Continent will provide necessary resilience against external trade wars while scaling economic potential and value chains.
Without a clear strategy of self-determination and self-development, the region will continue to be economically vulnerable, weighed down by debt and at the mercy of the will and whims of foreign leaders and nations.
Chains of structural dependency on foreign nations rather than strong links between African nations have kept both the region and Continent weak and disabled. Home-grown development and a strong engine of intra-trade is the only salvation. If this is not achieved the war of disunity and its divisive consequences will be far more damaging than the Trump tariff war.
* Kim Heller is a political analyst and author of No White Lies: Black Politics and White Power in South Africa.
** The views expressed do not necessarily reflect the views of IOL or Independent Media.