Over the past few days the world has watched in fascination as Donald Trump wasted no time getting stuck in on his return to the White House for a second term as US president.
Ahead of his inauguration the key question was what he might do immediately to advance his agenda. A key message of his electoral campaign was tariffs (on them) and taxes (for us). Core to this was the idea that trade imbalances with trading partners could be solved through the imposition of tariffs on goods and services they sell to the US.
In terms of this thinking, the restoration of America’s pre-eminent position in global trade would hinge on punishing those that do not toe the line, with the threat of denial of access to the US market.
For many international businesses the idea of being excluded from a market of that size, with that spending power, would be untenable, and any steps that could be taken to avoid tariff gridlock should be. The problem is that Trump’s tariff convictions seem to be driven by a combination of political and economic considerations. Imposing tariffs on Mexico would be aimed primarily at forcing it to deal with the border and immigration issues that seem to draw Trump’s ire most — more so after his failed attempt to build a wall between the two countries in his first term.
The rise of China as a global economic superpower is simply translated to a “displacement of us as the US” — otherwise how could they grow so strong, so fast. Targeting Chinese companies such as TikTok and Huawei earlier seemed premised on avoiding the entrenchment of Chinese behemoths into the US economy.
US-Chinese relations are far from linear. Chinese companies are regarded as too close to the Chinese government and hence have to fend off accusations that their products could be leveraged as instruments of agendas beyond the economics of trade.
For US businesses, the explicit overtures towards Trump by US companies and billionaires who need the political headwinds of the day to remain in lockstep with their economic ambitions, has made the intersections between pliant business and politics far more visible than before. Anxiety is unavoidable for those who lack the resources to buy themselves the type of proximity that would enable direct access to the levers of power.
Trump’s use of executive orders and unguarded statements regarding how he will deal with various countries has created market chaos, where those who speculate their way through the markets on a daily basis have to keep mapping what the potential consequence of each pronouncement might be.
If the tariff regime is implemented with the type of aggression Trump has suggested, the casualties of the knock-on effects will be the consumers and global supply chains that have to adapt. While markets might eventually find an equilibrium point — as they usually do — another sector that is affected more acutely is health, where US funding has kept NGOs functioning for many years.
The halting of funding by the US government will leave some incapable of continuing the work that complements many state healthcare systems across the world. When one contrasts this development with the executive order withdrawing the US from the World Health Organisation, the macro effects on the global healthcare system are amplified.
For countries and NGOs where the dependency on donor funding is higher due to limited resources, the funding crunch will not just halt continuing programmes but could reverse the gains that have been made in managing health-related outcomes.
This is unfortunately the type of problem that requires urgent solutions rather than the hope that all could be changed again in four years’ time when Trump leaves office.
• Sithole (@coruscakhaya) is an accountant, academic and activist.
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