It’s not comforting that American politics is starting to feel like KwaZulu-Natal, after Thomas Matthew Crooks shot Donald Trump though the ear on Sunday, July 14. He also killed a member of the crowd and injured another before being killed by the Secret Service.
The last attempted assassination of an American president was in 1981 when John Hinckley Jr. tried to assassinate Ronald Reagan.
Crooks is a Republican, making this feel even more like home, where political assassinations seem restricted to members of the same political party. We don’t yet know why Crooks tried to murder "The Don", but the attempt got me wondering what would happen if Trump won the November elections.
Following the disastrous presidential debate, unless President Biden is replaced with someone who won’t be found wandering in traffic, unable to remember their name, we are looking at another four years of Trump.
Amongst other things, Trump has promised to impose a 10% tariff on all goods entering the US and a 60% duty on all goods from China, except for Chinese cars, which will attract a 100% duty, even if they’re made in Mexico.
He has also vowed to reduce US involvement in Nato (North Atlantic Treaty Organisation), promote “patriotic education”, and penalise media outlets that are critical of him.
Unlike other politicians who make promises which are almost never kept, Trump is part of that rare breed who does what he says he will.
Total imports into the US for 2023 were $3.1 trillion. Of that, China accounted for $448 billion (15% of the total imported).
If Trump imposed his 60% duty on China, this would add a cost of $269bn just for Chinese products. The balance of $2.7tn would attract $270bn in duties. Of course, all of this won’t manifest but I’m quite sure some will.
South Africa sent $14bn to the US in 2023, with about a third of that under the African Growth and Opportunity Act (Agoa).
If Trump assumes office, we will probably lose the preferential Agoa access. This is not good, but the cash benefit of Agoa is “only” about R2bn per year in saved duties and this is heavily concentrated on a very small number of companies.
Not great, but also not devastating. If the duties on Chinese goods rise, we may find space in the US for our own products, which would be cheap by comparison.
What would happen to the products which were headed to America from China? A good question...
Given the factories are not going to cut back their capacity, these products will end up in other markets. But, when more goods enter a market where the demand is constant, prices drop. They have to. When these prices fall below the price in the market of manufacture, this is dumping.
Expect to see more dumping followed by more anti-dumping applications and anti-dumping duties. As more anti-dumping duties are imposed, those countries without duties will see even more of the product in their markets at even lower prices.
This is not all bad though. If the product is not made in the importing market, this is simply a bonanza for consumers, but where there is local production, the effect can be devastating.
High duties are being imposed on electric vehicles from China in the EU and the US, which will drive down the price of those cars in other markets. This is South Africa’s moment to drive up the number of electric vehicles on our roads.
Now is the time to completely remove the duties on electric vehicles and allow them to fill our roads. If we decide to make electric vehicles locally, the duties can be raised, but for now we should throw our gates wide open.
Trade wars are never one-sided and even if America throws the first punch, China will soon throw one back. This is a cold war, not economics, so expect both sides to rally their allies.
With Trump at the helm, it's not clear who that would be. When he was last in office, he threw a jab at Europe and a knee to the groin of both Mexico and Canada. These are all long-standing allies and largely aligned on the concerns around China.
His threats to withdraw from Nato are not going to endear him to his European allies, with a war happening in Europe.
South Africa, like many other countries, will find itself being treated as the grass when elephants fight. China will almost certainly call on its Brics (*) allies for support and how South Africa responds to this call is essential.
At no time has our non-aligned stance been more important. Non-alignment is a game which India has played incredibly well. We need to follow their example or be crushed by both sides of this conflict.
Still, Biden could win but I suspect pigs will fly before that happens. Of course, I said something similar about MK's prospects in our own recent election, and see how wrong I was then.
* Brazil, Russia, India, China and SA. Brics+ since the addition of Iran, Saudi Arabia, United Arab Emirates, Egypt, Ethiopia and Argentina.
