Most countries will start feeling the “Trump Tarrifs” from today [5th April].
The impact of this could be severe than the 2008 Global financial crisis or the Covid-19 pandemic. Reduced global trade volume is expected and a predictable global unemployment is just knocking on our doors if this tit-for-tat tax policies continue.
Major global stock markets turmoil deepened yesterday as China responds to Mr. Trump. In the US, the 3 major indexes plunged over 5%, thus recording the worse week since 2020 (the pandemic era). Who wins this “war”?
What started as the usual “US-China trade banter” has metamorphosed into a real Global Trade war – US versus the rest of the world.
Considering the size and significance of the US market, the impact of this trade war can be devastating, especially for small and weak economies with a strong US trading relationships.
Lesotho, for example, took advantage of the African Growth and Opportunities Act [AGOA] signed by President Bill Clinton in 2000 to grow its industry to supply to most American top brands such as Levis and Wrangler.
In 2024, the country enjoyed a trade surplus of about $235m with the US. Sadly, Lesotho is going to be punished for its success under a program introduced by the ‘same’ US government to help their economy and other small countries grow – To the ordinary person, but it does to Mr. Trump!
Ghana had over $200m trade surplus with its approx $2.1bn trade relationship with the US in 2024.
Despite enhancement in trade amongst our peers [about 52 countries], volume remains relatively low. For example, Ghana’s trade relationship with the US alone is about half [$2.1bn] of our top 5 trading partners in Africa [$4.5bn].
Make no mistake, Ghana, and her sisters in Africa will be hard hit by these Trump Tarrifs.
In all these, the European Union is speaking as a block. China is a huge economy and can easily stand on its own for any reciprocal measures it deems fit. Who then bears the brunt?
African countries do not have a unified voice and as such will be left to individually navigate these turbulence. Tough times ahead for every country, especially those in SSA as Mr Trump leaves no country behind – with his 10% base corrective tax.
African countries do not have the unified voice as in the case of the EU and do not individually have the size of Canada, India or China. However, this can be the defining moment for charting a new path – The “United Africa” we all wish to see, at least on the trading front.
Africa is surely going to pay a huge price for the snail’s pace it has adopted for implementing provisions of the African Continental Free Trade Area (AfCFTA).
There’s a saying that every challenge presents an opportunity. This is arguably the best opportunity for African countries to right all the wrongs.
Governments across the continent must, as a matter of urgency, prioritise our trading relationships, diversify our trade, adopt collaboration and above all clear all outstanding issues to ensure the smooth functioning of the AfCFTA.
For every leader in the continent, this should surely teach you one thingโฆ..”we need a shift in our trading practices”.
Trump has a duty (at least per his actions) to protect Americans. African leaders must understand that their ultimate responsibility is to protect our collective interest.
This is a wake up call at a perfect time!
