Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: President Trump has imposed sweeping tariffs on countries across the
Speaker 2: African continent on a day that saw America impose its
Speaker 2: steepest tariffs in a century.
Speaker 3: Our nations will finally be asked to pay for the
Speaker 3: privilege of access to our market, the biggest market in
Speaker 3: the world.
Speaker 2: All corners of Africa have been hit, including a fifty
Speaker 2: percent terra for Lisutu and fourteen percent for Nigeria. In
Speaker 2: announcing a thirty percent levee for South Africa, the President
Speaker 2: again referred to unfounded conspiracy theories.
Speaker 3: Then they've got some bad things going on in South Africa.
Speaker 3: You know we're paying them billions of dollars a week.
Speaker 3: Cut the funding because a lot of bad things are
Speaker 3: happening in South Africa. The fake news are to be
Speaker 3: looking at it. They don't want to report it.
Speaker 2: On this week's Next Africa Podcast, we look at what
Speaker 2: this global trade war will mean for the continent and
Speaker 2: what the fall out will be for economies as the
Speaker 2: world faces up to a revolution in global trade. I'm
Speaker 2: Jennifer's Abazanja and this is the Next Africa Podcast, bringing
Speaker 2: you one story each week from the continent, driving the
Speaker 2: future of global growth with the context only Bloomberg can provide.
Speaker 2: Joining me to discuss this breaking news is Bloomberg Economics
Speaker 2: Africa Economists, that is Yvonne Mango Ivon. Thanks again for
Speaker 2: joining us back on the podcast. This is a fast
Speaker 2: moving story. Just break down the latest for US and
Speaker 2: what we know about how African countries are going to
Speaker 2: be affected by these tariffs that Trump just announced.
Speaker 1: Well, if we look across the fifty countries on the continent,
Speaker 1: there seems to be one criteria by which they used
Speaker 1: in order to impose the TERFs. And this is not
Speaker 1: just for Africa, it's global. So for any country that
Speaker 1: the US had a trade deficit with, regardless of the
Speaker 1: size of it, whether it's in millions or billions or dollars,
Speaker 1: they've been posed tariffs that are higher than ten percent.
Speaker 1: For countries that the US has trade surpluses with, it's
Speaker 1: been that flat baseline tariff of ten percent. So in
Speaker 1: the case of South Africa, which last year exported fourteen
Speaker 1: billion dollars worth of goods to the US, South Africa
Speaker 1: I enjoyed a trade surplus with the US, which implied
Speaker 1: the trade deficit for the American market. As you saw,
Speaker 1: it was imposed of a significantly higher tariff than the
Speaker 1: baseline of around thirty percent. And that's similar for other
Speaker 1: African countries that also have trade surpluses with the United States.
Speaker 2: And we of course heard President Trump singling out in
Speaker 2: particular South Africa as he has previously. Do we know
Speaker 2: yet what the impact of these tariffs are going to be,
Speaker 2: especially when you take a look at some of these
Speaker 2: smaller I mean it's relative, but smaller countries that have,
Speaker 2: you know, their own resources that they've exported. What could
Speaker 2: we see the impact being economically?
Speaker 1: So we don't know, but we can sort of get
Speaker 1: an idea or these speculate in terms of what the
Speaker 1: impact could be. So I'll pick Klasuti for instance, a
Speaker 1: small mountain kingdom that sits within South Africa's borders. They've
Speaker 1: been hit with the large tariff of fifty percent. That's
Speaker 1: pretty surprising given that it's a very small economy with
Speaker 1: exports to the US that are only in the millions
Speaker 1: of dollars, so it's not even a threat to the
Speaker 1: United States. But they've been hit this big tariffs. What
Speaker 1: does listened to export? It exports apparel, which is garments
Speaker 1: essentially and diamonds. Now, what's unfortunate about the imposition of
Speaker 1: this high tariff on Lisutu is the export industry was
Speaker 1: actually something that was promoted by US policy. As you know, Lsutu,
Speaker 1: like several African countries, enjoyed duty free access to the
Speaker 1: US market under a GOA that's after and Growth and
Speaker 1: Opportunity Act. And part of that or the reasoning behind
Speaker 1: the US promoting such a policy was to help countries
Speaker 1: develop using exports or export driven growth. And that's that's
Speaker 1: exactly what Lissutu did and created this apparol industry. And
Speaker 1: now they're being penalized for doing so well at developing
Speaker 1: this industry to the point where they had a small
Speaker 1: trade surplus of the United States, and now they've been
Speaker 1: slapped fifty percent tariff. Now the question is, so what
Speaker 1: happens to those garments. So the alternative, I guess, would
Speaker 1: be for Lisutu to try and find an alternative market.
Speaker 1: That of course cannot happen overnight. Some businesses may not
Speaker 1: be able to do it soon enough in order to
Speaker 1: keep their businesses open essentially, and that's the one challenge.
Speaker 1: The other issue which we find prely odd is that
Speaker 1: in the SUITUS case, half of their exports are diamonds.
Speaker 1: That's war materials. And actually, if you look at several
Speaker 1: of the African countries that have trade surplus, is the
Speaker 1: US they're exporting war materials. And if you look at
Speaker 1: the reasoning behind Trump's tariff policy, part of it is
Speaker 1: to bring manifes actually jobs back to the United States.
Speaker 1: Slapping these high times and often countries is not going
Speaker 1: to you know, it doesn't fit that narrative because a
Speaker 1: lot of those exports were raw materials. Number one, it
Speaker 1: doesn't fit that narrative. And number two, it implies that
Speaker 1: Africa is going to have to source alternative markets for
Speaker 1: their raw materials. But the third point I'm probably going
Speaker 1: to make is what we're likely going to see over
Speaker 1: the next weeks to come is a lot of those
Speaker 1: countries pursuing bilateral trade agreements with the United States to
Speaker 1: try and get concessions because it will be very difficult
Speaker 1: for several countries to find alternative markets for their exports.
Speaker 2: And we've heard some countries actually talk about some of
Speaker 2: these potential bilateral agreements, especially as a GOA. The expiration
Speaker 2: of a GOA comes close to an end at the
Speaker 2: end of this year. I wonder, from your perspective, does
Speaker 2: this all but mean that a GOA is done and
Speaker 2: done in the water.
Speaker 1: I think the short answer to your question is yes,
Speaker 1: the cuprocal tarff supersedes a GOA. That's all understanding, and
Speaker 1: they'll be imposed as soon as I think it's the
Speaker 1: ninth of April. So everyone is working with these tariffs
Speaker 1: as we speak, and this is the basis of any
Speaker 1: negotiations that countries want, but it won't be a multilateral
Speaker 1: trade agreement as it was previously. Countries are going to
Speaker 1: have to pursue bilateral agreements to try and get concessions.
Speaker 1: But I don't think we're going to go back to
Speaker 1: the days whereby the countries that are a party to
Speaker 1: this a GOA act are going to get the same
Speaker 1: duty free access that got previously. I think those days
Speaker 1: are gone. I think the best you can hope for
Speaker 1: is ten percent. What is the baseline that the US
Speaker 1: is imposing.
Speaker 2: Stick with us VON When we come back, we'll talk
Speaker 2: more about what the fallout from this global trade war
Speaker 2: could mean for the continent. We'll be right back. Welcome
Speaker 2: back today on the podcast we're looking into President frum
Speaker 2: sweeping tariffs that are having repercussions across the world. Bloomberg
Speaker 2: Economics African economists Ivon Mango is with us this week. Ivon,
Speaker 2: we have seen a global market sell off as these
Speaker 2: cariffs are having a worldwide impact. When we think about
Speaker 2: African economies, we think about the raw materials that you
Speaker 2: were just mentioning that are critical for many of these economies,
Speaker 2: and of course a number of volatile currencies within these economies.
Speaker 2: What's the effect going to be?
Speaker 1: So let's speak to South Africa in terms of the
Speaker 1: goods that or the products that enjoyed a GOA access.
Speaker 1: That was mainly the automotive industry, as well as the
Speaker 1: citrus industry, which is part of our flourishing agriculture industry.
Speaker 1: A lot of companies in those particular industries targeted themselves
Speaker 1: to the United States market, so you can imagine at
Speaker 1: this point in time and time they'll be floundering. The
Speaker 1: option is to try and diversify your markets, which I
Speaker 1: think we're already seeing in the agriculture industry, particularly to Asia.
Speaker 1: I think one new market opened recently, which is the Philippines.
Speaker 1: For South Africa so there is this push forward diversification,
Speaker 1: but on the automotive side. In terms of alternatives, you've
Speaker 1: got the EU as well. But as I mentioned earlier,
Speaker 1: it takes time to make those agreements and for that
Speaker 1: to take place. And also keep in mind these tariffs
Speaker 1: are global, so the h country is bearing the impact
Speaker 1: of these tariffs, and particular, if your export industry takes
Speaker 1: a knock, it does have implications for growth. So we're
Speaker 1: expecting a slow down in growth from many of the
Speaker 1: major economies, which are also sizeable markets for African countries.
Speaker 1: So while yes, the ideal thing will be to look
Speaker 1: for alternative market, those markets themselves will also be floundering
Speaker 1: because demand on their side will slow down and that
Speaker 1: has implications for our capacity to find markets for our.
Speaker 2: Exports certainly, and one of those could very directly be China,
Speaker 2: right correct, What could that spill over? And again we
Speaker 2: know it is still very early China direct line of
Speaker 2: fire to a certain extent of these tariffs. What could
Speaker 2: that spill over mean for the continent.
Speaker 1: So the main product that China consumes from Africa are
Speaker 1: raw material so it's your crude oil and minerals such
Speaker 1: as copper. In some instances, particularly comes to critical minerals.
Speaker 1: There's still this race between the US and China for
Speaker 1: those particular minerals. So I'd imagine countries that have critical
Speaker 1: minerals will still be in a position to get concessions
Speaker 1: from the United States given that there's this race for
Speaker 1: those minerals. So that's what we anticipate, at least for
Speaker 1: the exporters of critical minerals, which includes the like of
Speaker 1: the Democratic Republic of Congo, Zambia and also South Africa.
Speaker 1: That's what we anticipate in terms of the other raw materials,
Speaker 1: including coude. So we have seen exporters of cood also
Speaker 1: being slapped to high tariffs, such as Algeria simply because
Speaker 1: they have a trade surplace of the US. Once again,
Speaker 1: you know, it's easy enough to find an alternative market
Speaker 1: if demand is strong globally. What will probably have and
Speaker 1: is this could impact pricing. So while you may be
Speaker 1: able to divert your product to other markets, you could
Speaker 1: see commodity prices or some commodity prices come under downward
Speaker 1: pressure given the slowdown we're expecting global growth as a
Speaker 1: result of trade wars.
Speaker 2: And so VN. Just finally, what are you looking at next?
Speaker 2: What is what's your focus? I mean, many of these
Speaker 2: countries are still waking up to the reality that this
Speaker 2: is setting in. Should we be paying attention to commodity prices,
Speaker 2: should we be paying attention to currencies or you know what,
Speaker 2: what do you think will really dictate sort of the
Speaker 2: direction of travel here for these economies.
Speaker 1: That's a good question. So right now we're trying to
Speaker 1: look at what it means for GDP growth in these countries.
Speaker 1: So for countries that are exposed in a big way
Speaker 1: to export to the US export markets such as I'll
Speaker 1: give an example of Madagascar which has been also been
Speaker 1: slapped with a high tier for over forty percent, and
Speaker 1: that's for exporting vanilla to the United States and their
Speaker 1: biggest export market is States. So in countries to which
Speaker 1: I heavily expose the US, we are expecting a slowdown
Speaker 1: that's more significant than other economies. So I think that's
Speaker 1: the big thing we're trying to determine which countries will
Speaker 1: be hit harder on the growth front compared to others.
Speaker 1: You mentioned currency is very important points if you're not
Speaker 1: able to get into your export markets or sell as
Speaker 1: many exports, it needs not generating as much foreign exchange
Speaker 1: as you used to. That's particularly important for countries that
Speaker 1: run current account deficits like South Africa, like Kenya, and
Speaker 1: that has implications for the currency. We've already seen the
Speaker 1: rand move weaker on the back of the announcement of
Speaker 1: the tariffs. That's just inn anticipation of what it could
Speaker 1: mean for our external position. But in terms of actually
Speaker 1: seeing what the real implications are, only time will tell,
Speaker 1: and at this stage it is negative for our currencies.
Speaker 2: It's a fast moving story. I always appreciate your insights, Vonne,
Speaker 2: really appreciate you joining us today, and hopefully we'll be
Speaker 2: able to make sense of this at a certain point
Speaker 2: in time. I don't know that. And thanks again so
Speaker 2: much to our Bloomberg Economics Africa economist Ivonne Mango for
Speaker 2: joining us this week. And you can read all of
Speaker 2: our coverage on the US tariffs across Bloomberg platforms now,
Speaker 2: including the Next Africa newsletter. We'll put a link to
Speaker 2: that in the show notes. This program was produced by
Speaker 2: Adrian Bradley. Don't forget to follow and review this show
Speaker 2: wherever you usually get your podcasts. I'm Jennifer's Abisoga. Thanks
Speaker 2: as always for listening. We'll see you next week.