As feared, the historic return of Donald Trump as America’s 47th president has upended most predictions about the effect his presidency would have on the world.
SA, a long-standing trading partner of the US, hasn’t been spared and is fast realising that the nightmare is turning into reality.
Last week Marco Rubio, Trump’s secretary of state, became the first senior Trump administration official to boycott G20 ministerial meetings. His treasury colleague, Scott Bessent, has also decided to stay home rather than attend the G20 finance ministerial meetings now taking place in SA.
The boycotts are an embarrassment to SA as host, but are less harmful than other punitive actions implemented by the Trump administration. SA can still achieve the goals of its G20 presidency, and should actually focus its efforts on them rather than the US.
The SA government has sought to play down the significance of the boycotts. Embarrassing his G20 counterparts through no-shows is not the only thing Trump has done. Relying on misinformation, he is cutting aid to SA and has threatened sanctions such as withdrawing SA’s participation in the African Growth & Opportunity Act (Agoa), the US law that grants thousands of SA exports duty and quota-free access to America’s markets.
Trump claims, falsely, that the SA government is expropriating the land of white South Africans without compensating the owners, and that its transformation policies and laws are tantamount to theft.
In the US he is aggressively doing away with diversity, equity and inclusion policies, and sacking thousands of public servants through Elon Musk’s efficiency office, which has amassed power from other departments.
Trump is also angry at the SA government’s move to file genocide charges against Israel at the International Court of Justice over Israel’s bombardment of Gaza after Hamas’s shock attack on Israel on October 7 2023.
Cutting aid to SA — even suspending it for three months — is likely to have damaging effect. Thousands could die if they don’t get life-saving medicines. SA will struggle to quickly replace the billions now supplied by the US government.
China, Canada and Mexico are facing stiff tariffs imposed on their exports to the US. SA’s expulsion from Agoa would have a similar effect to hiking tariffs. In the long term, this loss of trade preferences would also most certainly result in job losses.
Typically, trade wars — as in the case of the imposition of tit-for-tat import tariffs — never produce outright winners. Trump should have learnt this during his first term as president when China faced down his broad-based trade assault.
China actually emerged stronger after that trade war. US restrictions forced Chinese companies to innovate, and its electric vehicles are now selling like hot cakes the world over.
DeepSeek, which has taken the artificial intelligence world by storm, is also a product of a beleaguered China, which is big enough economically to take most of the body blows from Trump’s presidency.
This is the time to start talks for a more modern, mutually beneficial bilateral trade agreement with the US.
Trump has also threatened to pull out of the World Trade Organisation and UN. US global leadership and funding will be missed, but is not irreplaceable. America Alone, the hard version of Trump’s America First policy, is unlikely to be sustainable in the long term.
There are growing fears in diplomatic circles that Trump will step up pressure on SA government officials to back-pedal on the Israeli issue. This pressure may take the form of targeted sanctions against ANC government ministers and officials.
Even so, it is unlikely that the ANC-led government of national unity will withdraw its case against Israel, though not all of its members support the move.
So what should the government, business and ordinary South Africans do as the Trump presidency gets increasingly bellicose? The first thing to realise is that Trump’s administration is behind these hostilities, not ordinary Americans and US businesses.
Trump is not alone in seeking to grab as much power as he can. In a way, this makes him an ordinary politician. All politicians like unfettered power. Even though his flurry of executive orders has been disconcerting and is causing misery to ordinary people, most are permissible within the US constitution.
Strong institutions
The US has strong institutions. As well as the executive, there is Congress and the judiciary. The latter arms of state jealously guard their territories. Under these unprecedented circumstances, they are the last line of defence. As much as the world wants to sell to Americans, so US businesses need foreign markets.
The SA government should continue engaging with the US administration in the interests of both countries’ people and businesses. In three years there is a good chance that Trump won’t be in the White House, but the two countries will still be there.
On the trade front, the loss of Agoa benefits will be hurtful to SA exporters, but it will not be the end of the world. The arrangement is old-fashioned, and its replacement is long overdue. This is the time to start talks for a more modern, mutually beneficial bilateral trade agreement with the US.
There are other markets to look to. The EU, which has a free-trade agreement with SA, is still a significant trading partner, and so too is China. The EU-SA relationship has been deprioritised for too long; it’s time to rekindle it.
In the long term, economic operators, governments and ordinary people will have to embrace the uncertainty that is inherent in the Trump presidency.
• Dludlu, a former editor of The Sowetan, is CEO of the Small Business Institute.
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