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How will Trump's win impact South Africa?

by Raymond Parsons: Professor at the NWU School of Business & Governance and a former special policy adviser to Busa.
The pivotal and definitive outcome of the historic US elections for control of the White House and the Congress has wide ranging implications for the US economy and the rest of the world. The American electorate has spoken. The clear focus by President-elect Trump will be mainly on the US economy. While the decisive American election mandate has strengthened political certainty within the US, it has heightened market volatility and uncertainty elsewhere, including among emerging economies.

The US financial markets and dollar have strengthened in the immediate aftermath of the American elections but the rand, for example, has already weakened. Policy uncertainty may eventually prevail over political continuity in current global economic outlook. Political rhetoric will eventually be converted into policy outcomes by the Trump administration next year, such as heightened protectionism. Among the more tangible immediate policy commitments by a Trump presidency are of a general US tariffs imposition of 20% on all imports and as much as 60% on Chinese imports.

As a small open economy, South Africa has a vested interest in the multilateral trading system. Of importance to the SA economy of a Trump victory and the prospect of higher protectionism are therefore the greater risks to SA’s overall exports in general and also whether it will eventually affect the AGOA duty-free benefits in particular. In the light of the latest American political changes SA will therefore need to redefine its economic diplomacy with the US in ways that safeguard the basic shared economic interests that we still have with America, irrespective of political changes there.

This is also embedded in former President Thabo Mbeki’s recent call for SA to review and adjust its foreign policy stances in the light of major shifting geopolitical trends in general. Nonetheless, irrespective of the outcome of foreign elections, SA’s GNU must continue to prioritise implementing the right domestic policies needed to build SA’s economic resilience. The way to offset any adverse external trends is to ensure that SA’s economic house is in order, so as to achieve higher inclusive growth.

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NWU Business School
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