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President Trump has imposed sweeping tariffs on countries across the African continent on a day that saw America impose its steepest tariffs in a century.
Our nations will finally be asked to pay for the privilege of access to our market, the biggest market in the world.
All corners of Africa have been hit, including a fifty percent terra for Lisutu and fourteen percent for Nigeria. In announcing a thirty percent levee for South Africa, the President again referred to unfounded conspiracy theories.
Then they've got some bad things going on in South Africa. You know we're paying them billions of dollars a week. Cut the funding because a lot of bad things are happening in South Africa. The fake news are to be looking at it. They don't want to report it.
On this week's Next Africa Podcast, we look at what this global trade war will mean for the continent and what the fall out will be for economies as the world faces up to a revolution in global trade. I'm Jennifer's Abazanja and this is the Next Africa Podcast, bringing you one story each week from the continent, driving the future of global growth with the context only Bloomberg can provide. Joining me to discuss this breaking news is Bloomberg Economics
Africa Economists, that is Yvonne Mango Ivon. Thanks again for joining us back on the podcast. This is a fast moving story. Just break down the latest for US and what we know about how African countries are going to be affected by these tariffs that Trump just announced.
Well, if we look across the fifty countries on the continent, there seems to be one criteria by which they used in order to impose the TERFs. And this is not just for Africa, it's global. So for any country that the US had a trade deficit with, regardless of the size of it, whether it's in millions or billions or dollars, they've been posed tariffs that are higher than ten percent. For countries that the US has trade surpluses with, it's
been that flat baseline tariff of ten percent. So in the case of South Africa, which last year exported fourteen billion dollars worth of goods to the US, South Africa I enjoyed a trade surplus with the US, which implied the trade deficit for the American market. As you saw, it was imposed of a significantly higher tariff than the baseline of around thirty percent. And that's similar for other African countries that also have trade surpluses with the United States.
And we of course heard President Trump singling out in particular South Africa as he has previously. Do we know yet what the impact of these tariffs are going to be, especially when you take a look at some of these smaller I mean it's relative, but smaller countries that have, you know, their own resources that they've exported. What could we see the impact being economically?
So we don't know, but we can sort of get an idea or these speculate in terms of what the impact could be. So I'll pick Klasuti for instance, a small mountain kingdom that sits within South Africa's borders. They've been hit with the large tariff of fifty percent. That's pretty surprising given that it's a very small economy with exports to the US that are only in the millions of dollars, so it's not even a threat to the United States. But they've been hit this big tariffs. What
does listened to export? It exports apparel, which is garments essentially and diamonds. Now, what's unfortunate about the imposition of this high tariff on Lisutu is the export industry was actually something that was promoted by US policy. As you know, Lsutu, like several African countries, enjoyed duty free access to the US market under a GOA that's after and Growth and Opportunity Act. And part of that or the reasoning behind the US promoting such a policy was to help countries
develop using exports or export driven growth. And that's that's exactly what Lissutu did and created this apparol industry. And now they're being penalized for doing so well at developing this industry to the point where they had a small trade surplus of the United States, and now they've been slapped fifty percent tariff. Now the question is, so what happens to those garments. So the alternative, I guess, would be for Lisutu to try and find an alternative market.
That of course cannot happen overnight. Some businesses may not be able to do it soon enough in order to keep their businesses open essentially, and that's the one challenge. The other issue which we find prely odd is that in the SUITUS case, half of their exports are diamonds. That's war materials. And actually, if you look at several of the African countries that have trade surplus, is the
US they're exporting war materials. And if you look at the reasoning behind Trump's tariff policy, part of it is to bring manifes actually jobs back to the United States. Slapping these high times and often countries is not going to you know, it doesn't fit that narrative because a lot of those exports were raw materials. Number one, it doesn't fit that narrative. And number two, it implies that Africa is going to have to source alternative markets for
their raw materials. But the third point I'm probably going to make is what we're likely going to see over the next weeks to come is a lot of those countries pursuing bilateral trade agreements with the United States to try and get concessions because it will be very difficult for several countries to find alternative markets for their exports.
And we've heard some countries actually talk about some of these potential bilateral agreements, especially as a GOA. The expiration of a GOA comes close to an end at the end of this year. I wonder, from your perspective, does this all but mean that a GOA is done and done in the water.
I think the short answer to your question is yes, the cuprocal tarff supersedes a GOA. That's all understanding, and they'll be imposed as soon as I think it's the ninth of April. So everyone is working with these tariffs as we speak, and this is the basis of any negotiations that countries want, but it won't be a multilateral trade agreement as it was previously. Countries are going to have to pursue bilateral agreements to try and get concessions.
But I don't think we're going to go back to the days whereby the countries that are a party to this a GOA act are going to get the same duty free access that got previously. I think those days are gone. I think the best you can hope for is ten percent. What is the baseline that the US is imposing.
Stick with us VON When we come back, we'll talk more about what the fallout from this global trade war could mean for the continent. We'll be right back. Welcome back today on the podcast we're looking into President frum sweeping tariffs that are having repercussions across the world. Bloomberg Economics African economists Ivon Mango is with us this week. Ivon, we have seen a global market sell off as these
cariffs are having a worldwide impact. When we think about African economies, we think about the raw materials that you were just mentioning that are critical for many of these economies, and of course a number of volatile currencies within these economies. What's the effect going to be?
So let's speak to South Africa in terms of the goods that or the products that enjoyed a GOA access. That was mainly the automotive industry, as well as the citrus industry, which is part of our flourishing agriculture industry. A lot of companies in those particular industries targeted themselves to the United States market, so you can imagine at
this point in time and time they'll be floundering. The option is to try and diversify your markets, which I think we're already seeing in the agriculture industry, particularly to Asia. I think one new market opened recently, which is the Philippines. For South Africa so there is this push forward diversification, but on the automotive side. In terms of alternatives, you've got the EU as well. But as I mentioned earlier, it takes time to make those agreements and for that
to take place. And also keep in mind these tariffs are global, so the h country is bearing the impact of these tariffs, and particular, if your export industry takes a knock, it does have implications for growth. So we're expecting a slow down in growth from many of the major economies, which are also sizeable markets for African countries.
So while yes, the ideal thing will be to look for alternative market, those markets themselves will also be floundering because demand on their side will slow down and that has implications for our capacity to find markets for our.
Exports certainly, and one of those could very directly be China, right correct, What could that spill over? And again we know it is still very early China direct line of fire to a certain extent of these tariffs. What could that spill over mean for the continent.
So the main product that China consumes from Africa are raw material so it's your crude oil and minerals such as copper. In some instances, particularly comes to critical minerals. There's still this race between the US and China for those particular minerals. So I'd imagine countries that have critical minerals will still be in a position to get concessions from the United States given that there's this race for
those minerals. So that's what we anticipate, at least for the exporters of critical minerals, which includes the like of the Democratic Republic of Congo, Zambia and also South Africa. That's what we anticipate in terms of the other raw materials, including coude. So we have seen exporters of cood also being slapped to high tariffs, such as Algeria simply because they have a trade surplace of the US. Once again, you know, it's easy enough to find an alternative market
if demand is strong globally. What will probably have and is this could impact pricing. So while you may be able to divert your product to other markets, you could see commodity prices or some commodity prices come under downward pressure given the slowdown we're expecting global growth as a result of trade wars.
And so VN. Just finally, what are you looking at next? What is what's your focus? I mean, many of these countries are still waking up to the reality that this is setting in. Should we be paying attention to commodity prices, should we be paying attention to currencies or you know what, what do you think will really dictate sort of the direction of travel here for these economies.
That's a good question. So right now we're trying to look at what it means for GDP growth in these countries. So for countries that are exposed in a big way to export to the US export markets such as I'll give an example of Madagascar which has been also been slapped with a high tier for over forty percent, and that's for exporting vanilla to the United States and their biggest export market is States. So in countries to which I heavily expose the US, we are expecting a slowdown
that's more significant than other economies. So I think that's the big thing we're trying to determine which countries will be hit harder on the growth front compared to others. You mentioned currency is very important points if you're not able to get into your export markets or sell as many exports, it needs not generating as much foreign exchange as you used to. That's particularly important for countries that run current account deficits like South Africa, like Kenya, and
that has implications for the currency. We've already seen the rand move weaker on the back of the announcement of the tariffs. That's just inn anticipation of what it could mean for our external position. But in terms of actually seeing what the real implications are, only time will tell, and at this stage it is negative for our currencies.
It's a fast moving story. I always appreciate your insights, Vonne, really appreciate you joining us today, and hopefully we'll be able to make sense of this at a certain point in time. I don't know that. And thanks again so much to our Bloomberg Economics Africa economist Ivonne Mango for joining us this week. And you can read all of our coverage on the US tariffs across Bloomberg platforms now, including the Next Africa newsletter. We'll put a link to
that in the show notes. This program was produced by Adrian Bradley. Don't forget to follow and review this show wherever you usually get your podcasts. I'm Jennifer's Abisoga. Thanks as always for listening. We'll see you next week.