Donald Trump’s recent statement about investigating alleged human rights violations in South Africa sent shockwaves throughout the country. While the political implications of his words are still being debated, the economic consequences of the statement could have far-reaching effects on South Africa’s trade relationships, investment, and growth.
This publication spoke with independent economist Mthobeli Mankahla to understand the potential economic implications of Trump’s statement and what it means for South Africa’s future.
“Donald Trump said he wants to investigate what is going on in South Africa because he objects to certain policies that he believes are committing human rights violations against a specific race. I think this means a couple of things on the political front, which of course must be managed. But realistically, from a financial and economic perspective,” the economist said.
America is no longer South Africa’s largest trading partner; our biggest trading partner is China, followed by the European Union.
In addition, Mankahla noted that South Africa doesn’t receive significant aid from the United States. He mentioned that the presidency has confirmed the only assistance South Africa receives is 17% of the funding for its aid programs, which is quite limited.
Continuing with his analysis, Mankahla explained that America is no longer South Africa’s largest trading partner. Our biggest trading partner is now China, followed by the European Union. However, there are still important exports to the United States, especially through the African Growth and Opportunity Act (AGOA), under which South Africa exports items ranging from agricultural goods to wine.
“If Donald Trump imposes tariffs on South Africa, it will immediately have an impact because even our mining products, which were once sold to America, are now sold to China, Europe, and other parts of Africa,” Mankahla said.
He also noted, “I expect that there will be deeper engagements, but this might be just a ploy to get South Africa to engage with the United States. However, a bigger issue is that for South Africa, this is a significant year. We are hosting the G20 summit, which brings together the 20 richest countries in the world. Interestingly, when we host the summit at the end of this year, President Ramaphosa will be handing over the presidency of the G20 to the United States. This means he may be handing it over to Donald Trump, which requires both sides to play nice and engage diplomatically, as South Africa and the USA will effectively drive the agenda during this period.”
Trump is up and arms to destroy his enemies, lets wait and see how this ends.