As the dust of political uncertainty settles around Donald Trump reclaiming the White House after the US election, investors and foreign policy and international trade analysts have said that South Africa stands at a unique crossroads with opportunities and challenges under the upcoming US administration.
Trump ran his entire campaign on implementing aggressive tariffs on imports, deregulation, and promised corporate tax cuts as well as a transactional approach to international relations.
Rashaad Tayob, macro strategist and portfolio manager at Foord, on Friday said there were serious trade implications for South Africa under the Trump presidency.
“With 10% of South African exports going to the US, new tariffs could affect trade under the African Growth and Opportunity Act (AGOA),” Tayob said.
“However, South Africa’s balanced trade with the US may soften the blow compared to nations more heavily dependent on American imports and exports.”
Trump has in the past questioned the benefits of AGOA for the US economy and there is speculation he might consider revising or even restricting South Africa’s access under this act if he perceives South Africa’s policies as misaligned with US interests.
While the Trump administration was often perceived as antagonistic to free trade agreements, its record reveals a nuanced approach, particularly towards bilateral relationships.
Under Trump’s watch, negotiations for a free trade agreement (FTA) with Kenya were initiated — a move that could signal similar overtures towards South Africa, provided certain conditions are met.
US foreign policy expert Professor Michael Walsh – a senior fellow in the Africa Programme at the Foreign Policy Research Institute, told Business Report on Saturday the Trump administration was not completely against free trade agreements, despite the rhetoric.
Walsh said the re-election of Trump, therefore, presented the South African government with an opportunity to pursue a new bilateral trade agreement with the US if it so chooses.
“There is no doubt that such an agreement could help to unlock much more of the economic potential of South Africa,” Walsh said.
“However, it would be difficult to reach such an agreement. It would almost certainly require that South Africa exit from the BRICS and fundamentally change its political and security relations with China, Iran, and Russia.”
Commentators have also speculated that Trump’s return to the White House has also mooted policy changes specifically ending development assistance to poor countries, except where the US might derive direct and fairly fast benefit from providing that funding.
Walsh said Trump’s administration may adopt a more critical stance on the size and focus of US aid, assessing South Africa’s role as a responsible regional stakeholder with heightened scrutiny.
He said Trump probably feels that he does not get enough credit for his previous administration's efforts to strengthen US-Africa relations.
“It would be more accurate to say that the Trump Administration was strongly against what it perceived to be “indiscriminate aid, trade, and investment assistance,” he said.
Instead, the Trump Administration wanted the US government to focus on what it referred to as ”key countries and particular strategic objectives”. Among other things, this was supposed to shift the focus of the US government toward the structural elimination of economic reliance of major African economies on China.
The US Congress is also likely to heighten its oversight on South Africa, particularly critiquing initiatives that jeopardise US national security and foreign policy interests.
Yael Geffen, CEO of Lew Geffen Sotheby’s International Realty, on Saturday said Trump was known for many things, but a forgiving nature was not one of them.
Geffen said Trump was very outspoken about going head-to-head with the South African government during his last term, specifically about “land and farm seizures, expropriation and the large-scale killing of SA farmers”.
“Since then, South Africa has hauled Israel, one of America’s closest allies, before the war crimes tribunal in The Hague, and also been very scathing of US policy,” Geffen said.
“With the new US president blind to most shades of grey, if you’re not with him, you’re against him, and global analysts believe that will very quickly manifest in a dramatic departure from past policy.
“The new plan is likely to see a redistribution of US federal resources around the world, with supporters of US global policy benefiting, and governments viewed as “hostile” suddenly facing a bare cupboard.”