By offering the world with the greenback as reserve foreign money the US has more and more run commerce and price range deficits because the demand for {dollars} will increase regardless of US financial fundamentals. It now faces a commerce deficit of greater than $1-trillion and has a authorities debt of $36-trillion. The worldwide commerce system is unsustainable from the US’s standpoint.
Whereas the primary section of this “grasp plan”, as described by economist and former Greek finance minister Yanis Varoufakis and explicitly outlined in 2024 by Stephan Miran, chairperson of Trump’s financial advisers, includes the levying of unprecedented tariffs, the second section consists of particular person financial coercion via bilateral negotiations. For SA, this stage is more likely to lengthen past purely financial calls for.
Given the present geopolitical panorama, the US is probably to make use of its financial leverage to strain SA on security-related issues. This might embrace calls for to rethink its stance on the Worldwide Court docket of Justice case in opposition to Israel, to reduce its co-operation with different Brics nations similar to China and Russia, and to offer unfettered entry to American corporations similar to Elon Musk’s Starlink.
SA can’t afford a passive response, nor delay placing a complete export technique in place. A multipronged export technique, drawing on classes from sport concept and historic precedents, presents the most effective path ahead to navigate this turbulent interval and finally safeguard its long-term financial pursuits. It ought to consist of varied simultaneous measures and pathways.
The primary of those is that SA should use expansionary financial coverage over the quick time period to stimulate the native economic system and improve the competitiveness of its exports. Reducing rates of interest now might be a superb transfer. It’ll weaken the rand, compensating for the results of the US tariffs, and stimulate the home economic system.
The second, and maybe extra necessary, is to limit exports of the crucial and excluded minerals. The US tariffs seem to have excluded sure crucial minerals. SA, possessing important reserves of such supplies (similar to the PGMs required by corporations similar to Tesla), might strategically think about imposing export restrictions on these items. This is able to leverage SA’s market energy in particular sectors — just like what China did in its 2018 commerce battle with the US, which led to the US relenting. That China has already begun limiting its exports of those crucial minerals to the US gives SA with additional leverage.
SA also needs to urgently lodge a dispute with the World Commerce Organisation (WTO). Whereas the WTO’s effectiveness has been questioned, notably by the US, it gives a platform to problem the legality and equity of the tariffs beneath worldwide commerce guidelines and garner worldwide help. This was the route taken by the EU in its 2018 dispute with the US. After April 2, China has already lodged such a dispute.
SA should additionally speed up its efforts to diversify its exports away from the US. Strengthening commerce ties with different Brics+ nations, the EU and rising economies in Asia and Africa is important to mitigate the impression of US tariffs and construct resilience in a fragmented international economic system. SA has the instruments to establish sensible various export markets to interchange these that could be misplaced within the US.
SA ought to trace at, and think about, focused reciprocal tariffs. Nevertheless, sport concept means that by itself SA can’t win a tit-for-tat tariff battle with the US as a result of asymmetry within the international locations’ publicity to 1 one other. Nevertheless, if SA can co-ordinate a response with different international locations the price to the US of sustaining its tariffs might be extra important.
All 4 of the responses as an anti-Trump tariff playbook will strengthen SA’s negotiating place with Washington. We shouldn’t be naive although. The Trump administration will attempt to apply monetary and financial coercion to the utmost — it is usually more likely to threaten the nation with monetary sanctions. It has already began down this highway by stopping help transfers to SA in addition to different international locations in want.
SA should be cautious to stroll the tightrope between being prepared to barter with US — with out being seen to capitulate or to permit US interference within the nation’s home affairs — and abandoning its ethical combat in opposition to Israel’s plausibly genocidal behaviour and apartheid-like insurance policies. Negotiations with Trump with out holding any playing cards would find yourself being disastrous for SA.
The motivations behind the US’s protectionist shift are deep-seated, rooted in issues about greenback overvaluation, persistent commerce deficits and a want to reassert financial dominance in a altering international order. Even when the present tariffs are postponed for longer than 90 days, are diluted or altered indirectly in future, which is very probably given the monetary sector’s backlash within the US and the prices imposed by Chinese language retaliation — elements which have already precipitated Trump to retreat — the underlying pressures driving the US in the direction of a extra unilateral and coercive commerce coverage are unlikely to dissipate solely.
SA wants to maneuver quick and with agility to strategically place itself within the newly rising world order.
• Dr Naudé is visiting professor in expertise, innovation, advertising & entrepreneurship at RWTH Aachen College in Germany; distinguished visiting professor on the College of Johannesburg; and a fellow of the African Research Centre at Leiden College within the Netherlands. Dr Cameron, a quantitative economist, is MD of Commerce Analysis Advisory, an organization that was spun out of North West College.
