Donald Trump's 'Liberation Day' and Its Potential Impact on Africa

Trade tariffs are an obsession for U.S. President Donald Trump. Since reentering office earlier this year, Trump has implemented a 10 percent tariff on Chinese imports and suspended impending tariffs on goods from its closest neighbors and biggest trading partners, Canada and Mexico. Last week, he announced 25 percent tariffs on auto imports, which will come into effect after today, April 2, a date Trump has now dubbed 'Liberation Day.'

The auto tariffs are a sneak peek into the litany of tariffs the U.S. President is unveiling today. While Trump has stated that the tariffs are meant to boost domestic production, he's also noted his readiness to use tariffs as political tools against countries that don't align with his administration. Meanwhile, Canada, Mexico, and the European Union (EU) have stated readiness to apply reciprocal tariffs.

Countries with trade tariffs on goods from the U.S., like India, Thailand, and Turkey, are expected to be hit with tariffs. Also, countries and regions operating on a sizable trade surplus will face tariffs. On these two fronts, African countries should be generally safe. Last year, American trade with Africa was atan estimated $71.6 billion. The U.S. trade deficit was at about $7 billion, which is a drop compared to itsmuch larger deficits with China ($295 billion), the EU ($235.6 billion), Mexico ($171.8 billion), and many more.

However, Trump's policies will impact African countries directly or indirectly. South Africa faces particular risk due to itsstrained relationship with the Trump administration and its $9 billion U.S. trade deficit in 2024. Any tariffs imposed on South Africa would also affect landlocked southern African neighbors like Lesotho and Zambia, which depend on South African ports for U.S. trade. Given Trump's tendency to make decisions based on personal feelings, South Africa could be targeted, with the trade deficit cited as justification. It remains unclear if other African countries with U.S. trade surpluses, such as oil producers Nigeria and Angola, might face similar measures.

The ramifications of Trump's tariffs are still being assessed. Goldman Sachs recently updated its recession probabilityfrom 20 to 35 percent if the tariffs are widespread and significantly disrupt global trade. For Americans, the tariffs could increase inflation rates, as importing companies pass on some or all of the cost to consumers. Meanwhile, countries subject to these tariffs may face reduced export demand, potentially impacting their economies.

The U.S. makes up a relatively small percentage of trade for African countries. Lesotho, where Trump's beloved golf shirts are manufactured, sends 21 percent of its exports to America, thehighest percentage for African countries. Mauritius and Ethiopia (13 percent each), Kenya (11 percent), Kenya, Nigeria, South Africa, and Ghana (all nine percent) are on the higher side of the exports to America.

This relatively minimal level of trade should mean African countries aren't significantly affected by tariffs; however, the global ramifications of Trump's move will have effects. Since the turn of the decade, African economies have been reeling from the disruption to global production caused by the COVID-19 pandemic and the shocks of the Russia-Ukraine war. A tariff war between the U.S. and other major economies worldwide could negatively impact African economies.

In a 2024 report, the International Monetary Fund (IMF)estimated that geoeconomic fragmentation of the global economy, caused by events like tariff wars, could lead to "long-term welfare losses of approximately four percent of GDP [for sub-Saharan Africa], twice the losses of the rest of the world."

"This strong effect results from the large losses of other resource-rich and non-resource-rich countries in SSA, given their high dependence on commodity trade. However, if the world experiences a less severe GEF-induced trade disruption—a strategic decoupling—SSA countries could derive minor gains from the re-shuffling of global market supply, especially in energy products," the report says.

As is often the case, Africa may bear the brunt of disruptions to the world order.