Africa's supply chains brace for Trump's tariffs and AGOA uncertainty
President Donald Trump's return to the White House has brought with it a wave of aggressive trade policies, including expanded tariffs on Chinese imports, universal import levies, and growing uncertainty around multilateral trade agreements. According to supply chain industry body Sapics, the repercussions are being felt across global supply chains, with African supply chain managers facing far-reaching consequences.
Adding to the pressure is the looming expiry of the African Growth and Opportunity Act (AGOA) this year, which threatens to strip many African exporters of their preferential access to US markets. As global trade routes shift and geopolitical tensions mount, Sapics warns that Africa's already vulnerable supply chains will need to rapidly adapt.
Among the challenges highlighted are rising import costs, congested trade routes, escalating freight prices, and increased currency volatility — all amplified by the shifting US trade stance under Trump's leadership.
"Even if African countries aren't directly targeted by tariffs, they will feel the ripple effects. Many goods imported into Africa - especially machinery, electronics and raw materials - come from Asia. When the US applies tariffs to China, for example, costs rise globally as supply chains reroute, production shifts and suppliers face higher demand elsewhere.
Freight rates and lead times under pressure
"As US firms seek alternatives to Chinese suppliers, Southeast Asian capacity is stretched thin. African businesses face longer lead times and increased costs when sourcing from the same regions. Freight rates may climb due to reconfigured global logistics patterns.
"Trade disputes between superpowers unsettle currency markets. Many African countries already struggle with currency instability, so supply chain managers must now navigate not only rising prices but also fluctuating exchange rates, making cost forecasting a nightmare," Sapics noted in a statement.
Sapics further states that this is compounded by AGOA hanging in the balance. This Act allows eligible sub-Saharan African countries to export thousands of products to the US duty-free. It has been critical to the growth of African industries, including the agriculture and automotive sectors.
Trump's 2025 administration has yet to confirm AGOA's renewal. If it is not renewed or restructured unfavourably, African exporters could lose critical price advantages in the US market. "For supply chain managers, this represents a serious threat, not only to export volumes, but to production planning, workforce stability and customer confidence," warns SAPICS.
Call for resilience and regional value chains
The not-for-profit supply chain body advises African supply chain managers to mitigate their risks by diversifying sourcing and export markets, by building regional value chains, strengthening supplier and buyer relationships, monitoring policy and engaging proactively, and reassessing their contracts and inventory.
Sapics also recommends that organisations accelerate their digital transformation to improve visibility, transparency, decision-making and collaboration across their supply chain.
"Relying on one export market or import region is now a major risk. Managers should explore alternative suppliers outside of high-demand regions and within Africa itself via the African Continental Free Trade Agreement (AfCFTA).
Trump's policies highlight the need to reduce dependency on global imports and build African self-reliance. Sourcing from or manufacturing within Africa, even if it is more expensive initially, helps protect supply chains from external shocks.
"Strong relationships mean better access to capacity, more favourable terms and early warnings of disruption. Now is the time to negotiate long-term agreements, collaborate on forecasting and co-invest in resilience.
Reviewing terms with suppliers and buyers to ensure flexibility in pricing, currency adjustments and delivery timelines should also be on the agenda. Holding additional inventory for critical items may be worth the cost,' Sapics states.
The organisation urges supply chain professionals to stay close to developments around AGOA. "Belonging to an industry association or collaborative network is more critical than ever," Sapics stresses.
"In a volatile global trade environment, African supply chain managers cannot afford to operate in silos. Being connected, engaged, sharing knowledge and collaborating across supply chains and sectors is vital.
The advocacy provided by an industry body, the collective voice and the risk mitigation enabled by collaboration are among the benefits, particularly amid the current uncertainty and challenges. Industry bodies also ensure that members are kept abreast of significant developments and updates, and that they have access to vital training and skills development to navigate supply chain shifts and challenges."
All rights reserved. © 2022. Bizcommunity.com Provided by SyndiGate Media Inc. (Syndigate.info).
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