In the era of globalisation, trade has become a pivotal element in shaping international ties and economic landscapes. However, the advent of tariff wars, particularly under President Trump's administration, has introduced a new dynamic that is reshaping the global trade environment.
These emerging tariff conflicts are not merely skirmishes between major economic powers but have far-reaching implications for regions across the globe, including Africa.
As a continent with diverse economies and burgeoning markets, Africa faces unique challenges and opportunities in navigating this tumultuous trade terrain.
The US has never played second fiddle to anyone and in anything since the end of World War II. Post World War II, the US controlled more than 50 percent of global manufacturing activity, establishing its dominance in international trade.
However, this hegemonic position has been increasingly challenged over the decades, leading to a dynamic and often volatile trade landscape.
In terms of manufacturing output, China is the global superpower, controlling more than 32 percent of global production, with the US coming in at a distant second at 16 percent, according to data from Statista.
In terms of wealth, the US is leading, followed closely by China. This dynamic has further complicated the global trade environment as the competition for economic dominance intensifies.
Therefore, the tariff strategy could be interpreted as an effort to restore the United States' dominance in manufacturing. In President Trump's arguments, imposing tariffs on imports will make America Great Again.
With tariffs, he aims to protect American industries from foreign competition and encourage domestic production. This approach is designed to make imported goods more expensive, incentivising consumers and businesses to buy American-made products.
The trade conflict between the United States and China is a prime example of how tariff wars can escalate, leading to a barrage of retaliatory measures that disrupt industries and markets. This kind of war will impact the economies directly involved and have a ripple effect on global trade dynamics, including Africa.
It will exacerbate long-lasting effects in many jurisdictions, affecting various sectors and economies. Further, it will create ripple effects that can lead to trade alliance shifts, supply chain adjustments, and economic policy changes.
Additionally, the uncertainty and volatility introduced by these tariff measures can result in market instability, influencing investment decisions and economic growth trajectories.
Africa can strategically leverage its wealth to gain geopolitical and economic advantages amid rising global tensions. As Africa navigates the turbulent waters of international trade, the African Union must seek to be non-aligned in an increasingly divisive world, strengthen its value addition and industrialisation, and enhance its regional cooperation and integration.
To succeed in all these, the continent must embrace transparency and governance, given that in the past, foreign nations have taken advantage of these key attributes to exploit the continent. In establishing robust accountability systems and ensuring transparent governance structures, African countries can safeguard their interests and prevent external entities from undermining their economies.
This requires a concerted effort to combat corruption, enforce legal standards, and promote democratic principles that empower local communities and foster sustainable development.
A non-alignment strategy will enable the continent to adopt a neutral stance, position itself as a mediator, and advocate for fair trade practices. This approach would allow the continent to constructively engage with multiple global powers without being dragged into conflicts.
The African Union can leverage its collective voice to negotiate equitable trade agreements that benefit the continent.
Moreover, it can maintain flexible trade policies and diversify its economic partnerships. Ultimately, the continent can reduce its exposure to external pressures and foster a more stable economic environment. This stance will also enhance Africa's ability to adapt to shifting global trends and safeguard its interests amidst the evolving geopolitical landscape.
It is time for the continent to strengthen its mineral value addition and industrialise to expand its manufacturing capabilities. Africa can reduce its dependency on volatile export markets of raw materials and create a more resilient economic foundation. This approach will bolster local economies and enhance Africa's bargaining power in international trade negotiations.
For example, nothing stops the Southern African Development Community (SADC) from leveraging South Africa's manufacturing capacities to process the abundant mineral resources in the region.
Some of Africa's Regional Economic Communities are somewhat integrated to begin integrating the continent into a formidable trading block. The African Continental Free Trade Area (AfCFTA) is no longer a dream. It can facilitate the creation of integrated value chains and promote intra-African trade, reducing the continent's exposure to external tariff wars.
Furthermore, governments and private sectors across Africa must prioritise infrastructure, technology, and education investments to support industrial growth. African nations can create a competitive edge and attract foreign investments by fostering innovation and developing skilled labour forces.
In summary, Africa must navigate the emerging tariff wars strategically, fostering regional cooperation, transparency, and sustainable industrialisation to mitigate external pressures and enhance its economic stability.
The Writer is Kenya’s Ambassador to Belgium, Mission to the European Union
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