WEBVTT - Have US Tariffs Thwarted South Africa’s G20 Presidency? 0:00:02.480 --> 0:00:07.000 Bloomberg Audio Studios, podcasts, radio news. 0:00:09.840 --> 0:00:13.320 Finance ministers and central bank governors from the G twenty 0:00:13.360 --> 0:00:17.119 countries met in South Africa this week, but despite the 0:00:17.239 --> 0:00:21.520 US Treasury Secretary Scott Bessett again skipping the summit, US 0:00:21.640 --> 0:00:23.840 tariffs are still driving the agenda. 0:00:25.040 --> 0:00:28.160 You know, we've taken in hundreds of billions of dollars 0:00:28.160 --> 0:00:32.720 in tariffs, hundreds of billions, and we haven't even started yet. 0:00:33.479 --> 0:00:35.640 And it's going to be a great thing for our country. 0:00:35.720 --> 0:00:37.080 I think it's going to be a fair thing for 0:00:37.159 --> 0:00:39.960 the world. And we really haven't had too many complaints. 0:00:40.520 --> 0:00:44.040 While South Africa wanted to focus on debt relief, climate 0:00:44.159 --> 0:00:48.959 and reform of global institutions, attention is instead firmly focused 0:00:49.000 --> 0:00:50.920 on the fallout of a global trade war. 0:00:51.200 --> 0:00:54.680 We, of course, meeting at a moment of ongoing uncertainty 0:00:55.040 --> 0:01:00.280 in the global economy, uneven growth trajectories, elevated debt levels, 0:01:00.720 --> 0:01:07.520 persistent inflationary pressures, and the complex implications of tightening financial conditions. 0:01:07.680 --> 0:01:12.320 The multilateral system is being tested, and our collective ability 0:01:12.440 --> 0:01:15.800 to respond will shape the pace of our recovery. 0:01:16.240 --> 0:01:19.679 On today's episode of The Next Africa podcast, we'll look 0:01:19.720 --> 0:01:24.040 at why there's only one topic dominating the agenda, and whether, 0:01:24.319 --> 0:01:27.800 as the US continues to ignore the G twenty, President 0:01:27.880 --> 0:01:31.120 Zero Ramaposa has any chance to make an impact with 0:01:31.200 --> 0:01:38.160 this year's presidency. I'm Jennifer Zabisajap and this is the 0:01:38.200 --> 0:01:41.920 Next Africa Podcast, bringing you one story each week from 0:01:41.959 --> 0:01:44.840 the continent driving the future of global growth with the 0:01:44.880 --> 0:01:51.640 context only Bloomberg can provide. I'm in Zimbali on the 0:01:51.680 --> 0:01:55.080 Indian Ocean coast of South Africa for what was hoped 0:01:55.080 --> 0:01:57.880 to be one of the flagship events for South Africa's 0:01:57.880 --> 0:02:01.840 presidency of the G twenty. President Ramaposa had hoped he 0:02:01.880 --> 0:02:04.400 could be the voice of the global South and push 0:02:04.480 --> 0:02:08.120 war agreement on issues such as debt relief and also 0:02:08.320 --> 0:02:12.200 climate finance. But instead, all of the talk this year 0:02:12.320 --> 0:02:15.880 has been about global trade and the impact of President 0:02:15.919 --> 0:02:18.840 Trump's tariff policy. In a moment, we're going to be 0:02:18.840 --> 0:02:23.919 speaking to Bloomberg's Africa economist Von Mango, but first let's 0:02:23.919 --> 0:02:27.000 hear from some of the key figures on the fringes 0:02:27.080 --> 0:02:31.000 of the G twenty. I spoke with Lascia Kenyajo, the 0:02:31.080 --> 0:02:34.960 Central Bank Governor of South Africa. How much do you 0:02:35.040 --> 0:02:38.640 think tariffs and tariff threats really are are sort of 0:02:38.680 --> 0:02:41.600 clouding any of these priorities that South Africa actually set 0:02:41.600 --> 0:02:43.720 out for in this two twenty presidency. 0:02:43.880 --> 0:02:48.080 Well, the term ifs remember get imposts on the economy 0:02:48.200 --> 0:02:51.640 that is planting that it would like to have test 0:02:52.040 --> 0:02:54.480 it is a cost on the consumers of that country 0:02:54.800 --> 0:02:59.120 in terms of pricing and the loot. But for all 0:02:59.240 --> 0:03:03.760 of us are exporting to the country that imposes terriffs, 0:03:03.919 --> 0:03:07.160 there is an impact on output and in the case 0:03:07.360 --> 0:03:11.040 of South Africa, the biggest impacts that come through the 0:03:11.120 --> 0:03:18.600 automative industry and the agricultural sector. The issue about also 0:03:18.800 --> 0:03:21.560 there is these important issues with having to grapple with 0:03:21.880 --> 0:03:25.919 what would this mean for the outlook of the USA 0:03:26.080 --> 0:03:30.200 economy and the poster that the FED might take in 0:03:30.320 --> 0:03:33.520 terms of monetary policy, and what did you mean to 0:03:33.520 --> 0:03:36.640 global financing conditions. Then the problem is that there are 0:03:36.680 --> 0:03:40.360 so many moving paths which is not clear where we 0:03:40.440 --> 0:03:44.720 would end up. Uncertainty abound and every way we talk 0:03:44.760 --> 0:03:47.360 about where unsettin about this, we are unsetting about that, 0:03:47.760 --> 0:03:51.680 and many central bandst resorts to just presenting a forecast 0:03:51.960 --> 0:03:54.920 and also have to do a scenario because we do 0:03:55.000 --> 0:03:56.880 not know how these things will open up. 0:03:57.040 --> 0:04:00.120 Is the absence of Scott person and your counterpart in 0:04:00.160 --> 0:04:03.440 the US, does that then set back the progress? 0:04:03.440 --> 0:04:07.800 But counterpart, my counterpart was here in February. My counterpart 0:04:07.960 --> 0:04:12.040 was in Washington, and he did indicate right at the 0:04:12.080 --> 0:04:14.000 beginning of the year that he will do the fact 0:04:14.000 --> 0:04:17.240 Amalary meeting, and he will do the April meeting, but 0:04:17.320 --> 0:04:19.720 that he will not do his meeting. He will be 0:04:20.040 --> 0:04:23.960 the FAT will be represented by a vice Chairlenge. And 0:04:24.279 --> 0:04:26.919 at the US flag, both the treasure inside and the 0:04:26.960 --> 0:04:29.680 fat side, there will be people. They're representing the US. 0:04:29.920 --> 0:04:32.599 What matters is is there some way behind the flat 0:04:32.920 --> 0:04:35.720 is able to articulate the position of profit country. 0:04:35.800 --> 0:04:37.919 That is important. Okay, so the absence of Scott Paston, 0:04:38.040 --> 0:04:41.240 then it is not necessarily a snub. You don't see 0:04:41.279 --> 0:04:42.120 it as a snub for US. 0:04:42.200 --> 0:04:44.839 This is not an absence of the US. See. 0:04:44.960 --> 0:04:47.839 I want to ask too about monetary policy, because we 0:04:47.960 --> 0:04:50.840 have seen inflation here in South Africa at least at 0:04:51.360 --> 0:04:55.000 or near or below the target for the central Bank 0:04:55.040 --> 0:04:57.960 for about eight consecutive ones I believe it's been and 0:04:58.080 --> 0:05:00.720 yet you still say the outlook is clouded. I think 0:05:01.160 --> 0:05:03.239 the term that you use, yes, the outlook is cloud 0:05:03.279 --> 0:05:08.480 Are you confident though, that inflation is moderating and moderating 0:05:08.680 --> 0:05:12.880 lower as the forecast did suggest over the past few months. 0:05:12.960 --> 0:05:16.400 We are confident the deity to moderated and we actually 0:05:17.000 --> 0:05:19.479 our basine is that we think that it really remain 0:05:20.040 --> 0:05:22.760 throughout our focus over the next twenty four months, that 0:05:22.800 --> 0:05:26.440 tally remain within targeting. But we do questions that the 0:05:26.480 --> 0:05:30.719 outlook is clouded. There is uncertainty out there in the 0:05:30.760 --> 0:05:35.640 global space in the main and I'm nott the international 0:05:35.720 --> 0:05:39.680 confidence I had attended about by the central bands over 0:05:39.760 --> 0:05:43.040 the past three months keeps on tammaring on the issue 0:05:43.040 --> 0:05:48.600 of uncertainties, monetary policy in uncertain times, financial stability, implications 0:05:48.680 --> 0:05:53.960 of the uncertain environment. Uncertainty is the word that is feminine. 0:05:53.560 --> 0:05:56.479 To stick with me. When we come back, we'll hear 0:05:56.640 --> 0:05:59.599 from von Mango about what's at stake in this global 0:05:59.640 --> 0:06:06.320 trade We'll be right back. Welcome back today on the podcast, 0:06:06.480 --> 0:06:10.479 we're discussing the G twenty finance leader's summit in South 0:06:10.520 --> 0:06:14.039 Africa that was this week, as the world continues to 0:06:14.120 --> 0:06:19.159 focus on growing trade tensions. Bloomberg's Africa economist von Mango 0:06:19.320 --> 0:06:22.400 is joining me now, Yvon. We spoke with you earlier 0:06:22.440 --> 0:06:26.320 in the year when the original tariffs were introduced. Of course, 0:06:26.400 --> 0:06:29.080 there has been quite a number of changes that have 0:06:29.160 --> 0:06:32.320 happened since then. Talk to us about the impact of 0:06:32.360 --> 0:06:34.520 some of those changes over the past few months on 0:06:34.600 --> 0:06:35.679 Sub Saharan Africa. 0:06:36.240 --> 0:06:39.200 So the last time we spoke, the tariffs, the reciprocal 0:06:39.240 --> 0:06:43.480 tariffs have just been imposed by the Trump administration. Since then, 0:06:43.600 --> 0:06:46.719 there was that ninety day pause that they announced in 0:06:46.760 --> 0:06:51.360 about mid April and that expired last week. Essentially, what 0:06:51.480 --> 0:06:54.360 was meant to happen during this ninety day pause is 0:06:54.640 --> 0:06:57.719 the US, since Trade partners was supposed to approach the 0:06:57.880 --> 0:07:02.800 US and negotiate lower tariffs by offering some sort of concessions. 0:07:03.120 --> 0:07:06.280 We saw a president from Apausa of South Africa be 0:07:06.400 --> 0:07:10.200 the delegation to the United States and part of the 0:07:10.280 --> 0:07:13.720 reason for that visit was to try and reach a 0:07:13.760 --> 0:07:17.440 favorable agreement when it comes to trade. As you're well aware, 0:07:17.840 --> 0:07:21.480 several African countries are part of what was known as 0:07:21.520 --> 0:07:26.880 the Africa Growth Opportunity Act. Basically that offered duty free 0:07:26.920 --> 0:07:31.040 access for several African countries into the United States. So 0:07:31.120 --> 0:07:34.120 you can imagine coming from that duty free access to 0:07:34.440 --> 0:07:39.120 a high levee has significant implications. The country hardest hit 0:07:39.200 --> 0:07:42.040 we touched upon this last time we spoke is Lusutu, 0:07:42.160 --> 0:07:45.720 which was slapped for fifty percent tariff even within the 0:07:45.800 --> 0:07:49.000 ninety day pause period, which gave the country an opportunity 0:07:49.000 --> 0:07:53.000 to negotiate. We've already seen factories closed down. These factories 0:07:53.000 --> 0:07:56.200 were producing garments that they exported to the United States 0:07:56.560 --> 0:08:00.480 and already seen jobs lost as a result. In terms 0:08:00.480 --> 0:08:03.640 of South Africa, the most industrialized country on the continent. 0:08:04.040 --> 0:08:06.200 What we heard about ten days ago from the United 0:08:06.240 --> 0:08:10.400 States is that the thirty percent reciprocal tariff would be 0:08:10.720 --> 0:08:15.080 reinstated on the first of August. It did suggest that 0:08:15.160 --> 0:08:18.600 there was scope in the three weeks until that date 0:08:18.920 --> 0:08:22.440 for the country to still have talks with the United States, 0:08:22.440 --> 0:08:25.120 but we haven't heard anything as yet, and I think 0:08:25.240 --> 0:08:28.920 several countries are preparing themselves to have the original high 0:08:29.040 --> 0:08:30.200 levees imposed. 0:08:30.720 --> 0:08:35.000 Would you say South Africa is the hardest hit in 0:08:35.040 --> 0:08:37.280 Sub Saharan Africa, I mean we talked about a few 0:08:37.280 --> 0:08:41.640 of the other smaller economies that are being maybe unjustly targeted, 0:08:41.880 --> 0:08:44.280 is what i'd call it. But would you say South 0:08:44.320 --> 0:08:47.800 Africa is maybe going to take the hardest brunt short answer. 0:08:47.559 --> 0:08:50.360 To that is no. I think a small, open economy 0:08:50.400 --> 0:08:52.240 like this to be harder hit. And the main reason 0:08:52.280 --> 0:08:55.160 is because their export to the United States accounts for 0:08:55.280 --> 0:08:58.800 ten percent of GDP. That's quite a big hit. We've 0:08:58.840 --> 0:09:02.040 modeled the impact on South Africa's economy, so yes, the 0:09:02.160 --> 0:09:05.320 US is an important trade partner. Ten percent of the 0:09:05.320 --> 0:09:08.720 country's exports end up in the United States, a court 0:09:08.800 --> 0:09:11.920 of which she used to enjoy duty free access. That's 0:09:12.160 --> 0:09:14.800 your like of your citrus products from the agriculture industry, 0:09:14.840 --> 0:09:18.480 as well as the automotive industry. However, when we look 0:09:18.520 --> 0:09:22.000 at the actual impact on GDP, it's less than a 0:09:22.080 --> 0:09:25.199 one percent hit. To be exactly, it's zero point three 0:09:25.240 --> 0:09:28.319 percent of GDP that's at risk as a result of 0:09:28.360 --> 0:09:32.720 these tariffs. So the impact, particularly compare to the Asian economies, 0:09:33.040 --> 0:09:37.000 is relatively small for Africa in general, but of course 0:09:37.280 --> 0:09:40.760 for the smaller economies such as Lisutu, they're going to 0:09:41.040 --> 0:09:44.320 see a much more significant repercussions as a result of 0:09:44.360 --> 0:09:45.880 this trade policy. 0:09:46.040 --> 0:09:49.920 And ivon at the G twenty summit, as we've talked 0:09:49.960 --> 0:09:52.559 about South Africa was really hoping this would be a 0:09:52.679 --> 0:09:54.600 year where they can focus on a lot of the 0:09:54.640 --> 0:09:58.240 Global South priorities. It has really become a year that 0:09:58.320 --> 0:10:02.680 has been focused on these tariffs and towarding what many 0:10:02.679 --> 0:10:06.360 people see as a bigger and broader trade war. Is 0:10:06.400 --> 0:10:11.920 there anything that maybe central bank governors, finance ministers can do. 0:10:12.320 --> 0:10:15.600 Are there any policies in place or discussions that maybe 0:10:15.640 --> 0:10:19.800 you're hearing to support or to offset some of the 0:10:19.840 --> 0:10:22.800 policies of the tariffs and from the Trump administration. 0:10:23.400 --> 0:10:27.240 So yes, you're right. In terms of the original objectives 0:10:27.520 --> 0:10:31.240 that South Africa had as the leading the presidency of 0:10:31.240 --> 0:10:33.960 the G twenty, this year a lot of those ideas, 0:10:34.000 --> 0:10:38.200 such as addressing climate change, putting debts, the issue of 0:10:38.480 --> 0:10:41.599 the developing world's high indebtedness as a core issue to 0:10:41.640 --> 0:10:45.959 be addressed, particularly by our developer partners, those issues now 0:10:46.080 --> 0:10:50.480 have been sidelined, which is unfortunate. And as you're right, 0:10:50.559 --> 0:10:53.839 many people are just reacting to the tariffs and how 0:10:53.840 --> 0:10:56.440 they can respond to that. In terms of how policymakers 0:10:56.640 --> 0:11:00.760 can react, I guess on the Monty policy side to banks, 0:11:00.960 --> 0:11:02.960 if they have the room to do so, can put 0:11:02.960 --> 0:11:06.400 in place accommodative policy PUS as you can imagine the 0:11:06.559 --> 0:11:09.640 hits that the impact of tips will be a slow 0:11:09.640 --> 0:11:12.240 down in growth generally, and that's globally, So it's a 0:11:12.320 --> 0:11:16.480 slower demand for our commodities and our exports, not just 0:11:16.480 --> 0:11:18.360 from the United States but from the rest of the world, 0:11:18.360 --> 0:11:22.280 which is also being hurt by these levees. So in 0:11:22.320 --> 0:11:25.560 countries where inflation is benign and in South Africa, were 0:11:25.600 --> 0:11:27.800 fortunate enough to say that that is the case at 0:11:27.800 --> 0:11:30.720 this point in time. That means that cent to banks 0:11:30.960 --> 0:11:33.800 can look at easy moneted policy to create a more 0:11:33.840 --> 0:11:38.240 accommodative environment that will support growth and consumption in their 0:11:38.240 --> 0:11:44.280 particular economies. On the fiscal side, what can finance ministers do? Unfortunately, 0:11:44.840 --> 0:11:49.280 the room for expansionary policy is very limited because we're 0:11:49.320 --> 0:11:52.679 just it's been five years since the pandemic, and then 0:11:52.920 --> 0:11:56.080 two years after the pandemic we experienced the impact of 0:11:56.400 --> 0:12:00.160 commodity prices, but again the grain sides spike and that 0:12:00.360 --> 0:12:04.040 led to inflation and high inflation globally, but that also 0:12:04.120 --> 0:12:07.800 impacted several African countries on the fiscal side, So what 0:12:07.920 --> 0:12:10.559 your face with the countries that are actually trying to 0:12:10.960 --> 0:12:15.280 reduce their budget deficits and to restore their debt positions 0:12:15.280 --> 0:12:17.640 to more sustainable levels. So our debt was meant to 0:12:17.679 --> 0:12:21.000 be such an important issue at these G twenty meetings. 0:12:21.200 --> 0:12:23.160 So the point I'm trying to make is there's very 0:12:23.240 --> 0:12:27.880 limited scope for finance ministers to put in place expansionary 0:12:27.920 --> 0:12:30.160 policies that would stimulate growth. 0:12:31.240 --> 0:12:34.440 And we heard from lesa Ya Kanyaho actually saying that 0:12:34.480 --> 0:12:37.400 it's it's difficult to say, is what he said, if 0:12:37.520 --> 0:12:42.960 risks are actually materializing based on the data, would you 0:12:43.640 --> 0:12:44.360 agree with that? 0:12:44.720 --> 0:12:47.160 Well, yes, I think it's term the wash. He spoke 0:12:47.200 --> 0:12:50.520 something about high to nightmare to forecast anything, and it's 0:12:50.520 --> 0:12:52.559 absolutely right. I mean, as a central bank governor when 0:12:52.559 --> 0:12:56.600 they're providing their rate decisions, which this African Reserve Bank 0:12:56.600 --> 0:12:59.240 will do later this month, they're forward looking, they're looking 0:12:59.280 --> 0:13:03.559 at the inflation and in this environment, it's highly uncertain, 0:13:03.640 --> 0:13:07.640 as you know, policy announced on such a high frequency 0:13:07.679 --> 0:13:10.640 basis and there's no guarantee that those policies that are 0:13:10.640 --> 0:13:13.600 being announced will be sustained. So yes, it is quite 0:13:13.640 --> 0:13:16.600 challenging in which environment in which to make policy. But 0:13:16.920 --> 0:13:19.600 that said, what we are seeing which is quite interesting 0:13:20.080 --> 0:13:22.880 is that for now, at least outside of the United 0:13:22.880 --> 0:13:25.680 States and in some emerging markets, we are seeing some 0:13:26.120 --> 0:13:29.960 softening of inflation, and that's we think as a consequence 0:13:30.480 --> 0:13:34.760 of the currencies doing well in emerging markets under a 0:13:34.800 --> 0:13:37.880 week dollar. So of course if your currency strengthy against 0:13:37.920 --> 0:13:41.480 a week dollar, what it means is that it reduces 0:13:41.520 --> 0:13:44.720 your important inflation. So we are seeing currencies soften on 0:13:44.720 --> 0:13:48.000 the back of that. It's also helping soften energy prices, 0:13:48.000 --> 0:13:51.640 which we've seen in South Africa. So inflation is actually 0:13:52.000 --> 0:13:55.520 cooler than many anticipated in many of our emerging markets, 0:13:55.960 --> 0:13:59.200 allowing for accommodated policy. So this is some of the 0:13:59.280 --> 0:14:03.200 trends we're already be seeing which could help particularly intents 0:14:03.200 --> 0:14:06.160 of trying to lick to growth if on Mango. 0:14:06.480 --> 0:14:09.760 Thank you as always for joining us and for your insights, 0:14:11.200 --> 0:14:13.520 and you can read all of our coverage on the 0:14:13.600 --> 0:14:18.040 G twenty on Bloomberg platforms now, including the Next African Newsletter. 0:14:18.320 --> 0:14:20.360 We'll put a link to that in the show notes. 0:14:22.640 --> 0:14:26.480 This program was produced by Adrian Bradley and tiwa Adebayo. 0:14:27.040 --> 0:14:29.720 Don't forget to follow and review the show wherever you 0:14:29.880 --> 0:14:33.960 usually get your podcasts. I'm Jennifer's Abasaja, thanks as always 0:14:33.960 --> 0:14:34.560 for listening.