How will U.S. tariffs impact Africa?
US President Donald Trump has announced a 10 per cent minimum baseline tariff for all imports into the US, with some countries rates multiple times higher in what the white house termed reciprocal tariffs imposed on many nations that place duties on U.S. imports. The reciprocal tariff policy will also impact some African nations like Nigeria, South Africa, Lesotho, and Madagascar. Johnson Chukwu, the CEO of Cowry Asset Management, joins CNBC Africa for this discussion.
Thu, 03 Apr 2025 14:16:56 GMT
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AI Generated Summary
- Trump's unilateral decision challenges the global trade system and signals a potential economic contraction.
- Higher tariffs could hinder reshoring of manufacturing to the U.S., prompting shifts in production to countries with lower duties like India.
- African nations must focus on intra-African trade and internal economic strength to navigate external trade uncertainties effectively.
US President Donald Trump's recent announcement of a 10 percent minimum baseline tariff on all imports into the United States, with significantly higher rates for some countries in what is being termed reciprocal tariffs, is causing waves across the global economy. The reciprocal tariff policy is set to affect several African nations, including Nigeria, South Africa, Lesotho, and Madagascar. Johnson Chukwu, the CEO of Cowry Asset Management, provided insights on the implications of these tariffs on CNBC Africa. Trump's decision to implement these tariffs challenges the effectiveness of the World Trade Organization (WTO) and indicates a move towards unilateral protectionism to safeguard the U.S. economy. The global market has already experienced the impact of the tariffs, with declining stock prices and energy prices, signaling a potential contraction in the global economy. As the markets brace for increased volatility, concerns arise regarding investment flows and currency fluctuations. While Trump aims to reshore manufacturing to the U.S., the resulting higher costs for American consumers may hinder this objective. Some manufacturing activities could potentially shift from countries facing high duties to nations with lower tariffs, such as India. In response to these trade tensions, African countries need to focus on promoting intra-African trade to reduce dependency on other regions. The African Growth Opportunities Act (AGOA) could face challenges due to the global tariff landscape. However, countries with lower tariffs, like Nigeria and Ghana, may attract investments looking to circumvent higher duties elsewhere. Despite the potential benefits, African economies lack the necessary infrastructure and capabilities to fully leverage this opportunity. Looking ahead, the unpredictability of the current administration suggests that more tariff-related developments may lie ahead. African leaders are urged to strengthen their economies internally to withstand external threats and uncertainties. While countries like China have navigated high tariffs by diversifying their exports, African nations must focus on building resilience to external economic shocks.