China's influence in African nations intensifies due to Trump's tariff policies
In a move that's causing concern among economists, Africa is expected to further solidify its trade relationship with China, as the continent's largest bilateral trading partner. This shift comes in response to the US tariff policy under President Trump's administration, which has imposed increased tariffs on various African exports, ranging from 10% to over 30%.
This protectionist stance by the US has strained traditional trade links with the US and prompted many African countries to seek alternative trading partners. China, with its willingness to engage in low-tariff or tariff-free trade and investment in infrastructure and industry, has emerged as a primary beneficiary of this trade realignment.
However, this shift towards China brings both opportunities and risks. On one hand, Africa stands to gain access to a large and growing market, Chinese investments in infrastructure and manufacturing that could boost productivity, more favorable trade terms, and the potential to leverage China as a counterweight to Western economic dominance.
On the other hand, increased reliance on China could lead to economic dependency, vulnerability to shifts in China's economic or political priorities, risk of debt accumulation, and possible crowding out of local African industries.
South Africa's President Ramaphosa, for instance, advocated for balanced trade with China during a meeting with his Chinese counterpart Xi Jinping last year. The citrus growers' group has voiced its reservations about finding another market for their products, and companies within the automobile sector in South Africa are threatening to leave due to plummeting business.
In Lesotho, authorities have declared a two-year national state of disaster over the tariffs, and the country is experiencing massive job losses. If not protected, Chinese products could flood and outcompete some African industries due to price sensitivity in many African markets.
Despite these challenges, experts advise that Africa must seek domestic alternatives and implement the African Continental Free Trade Area (AfCFTA) swiftly. They believe that the US tariffs could inspire Africa to build economic resilience and be less dependent on lopsided trade. As Letswalo puts it, while Africa leans on China for trade, it must also look inward and prioritise the AfCFTA.
In summary, the US tariff escalations have diminished African export competitiveness in the US market, catalysing a pivot towards China and other partners. This realignment offers new growth avenues but also heightens risks related to over-dependence and geopolitical influence from China. As Africa navigates this new trade landscape, striking a balance between leveraging opportunities and managing risks will be key.
References:
[1] Africa Renewal. (2020). Africa's trade with China: A new reality. Retrieved from https://www.un.org/africarenewal/magazine/december-2020-march-2021/africas-trade-china-new-reality
[3] Africa Centre for Strategic Studies. (2020). China's growing influence in Africa. Retrieved from https://www.acss.org/africa-file/china-s-growing-influence-africa
[4] Africa News. (2020). U.S. tariffs on African countries: The impact on trade and economy. Retrieved from https://www.africanews.com/2020/09/01/us-tariffs-on-african-countries-the-impact-on-trade-and-economy/
The protectionist stance by the US under President Trump's administration, as evidenced by the imposition of increased tariffs on various African exports, has led to a widespread search for alternative trading partners among African countries.
This escalation in US tariffs on African goods, as reported by Africa News, has catalyzed a trade realignment towards China, creating a complex interplay of opportunities and risks in the global policy-and-legislation landscape of the world.