African countries brace for impact as Trump announces further tariffs

CBS News

5 days ago

Johannesburg, South Africa - African countries had been bracing for bad news and scrambling for last-minute negotiations ahead of President Trump's announcement of tariffs on Thursday night.
South Africa, which has had a strained relationship with Mr. Trump, is the only African country singled out in the announcement with a 30% tariff increase on August 7. Most other African countries have been hit with tariffs of 10-15%.
South African Trade Minister Parks Tau said he, other ministers, and people across all sectors, from business to civil society, had been working for months to negotiate a deal with Washington, including offering to invest $3.3 billion in U.S. industries and buy natural gas but there was no response.
"My opinion, we have pulled out all stops, sending ministers from various departments, business delegations and trade unions to fully address U.S. concerns," Tau said.
He said there was no response to their initial offer until Wednesday evening, when U.S. officials told them to improve their offer in a last-minute appeal.
"We don't have a deal, we spoke to U.S. last night (Wednesday) and they indicated that they could not confirm what the announcement would be and encouraged us to submit an enhanced proposal that would be presented to the White House," Tau said.
In a statement Thursday night, Tau said, "We are working with urgency and resolve to implement real, practical interventions that defend jobs and position South Africa competitively in a shifting global landscape."
In neighboring Lesotho, the government declared a state of emergency following the declaration in April that the U.S. would impose a 50% tariff – the highest in the world. The threat of tariffs had devastating effects reverberating across the tiny mountain kingdom of just over 2 million people. The notice came just months after U.S. aid funding cuts and now the threat of tariffs meant many garment companies closed their doors or reduced their staff to half-time in the ensuing months.
Lesotho is often referred to as the "denim capital of Africa" as it is where Levi's and other brands are manufactured, as well as other textiles for companies like JCPenney, Walmart and Costco.
The African Growth and Opportunity Act (AGOA), created in 2000 as part of the "trade not aid" philosophy, gives some 35 African countries duty-free access to the U.S. for their goods. The textile industry, the country's main employer, providing as many as 50000 jobs, has had a trade surplus with the U.S. for the last few years. This is why some economists believe Mr. Trump singled out Lesotho for the hefty tariffs.
Addressing Congress in March, Mr. Trump was listing off global cuts that he called wasteful expenditure and cited Lesotho as an African nation "no one has ever heard of." His words reverberated across the country and started months of diplomacy that culminated in various concessions, including a willingness to accept deportees from the U.S., as well as other financial incentives likely helped revise the massive tariffs threatened downwards.
Most African countries will have a 10 – 15 % tariff imposed but remain concerned as the September deadline to renew the African Growth and Opportunity Act approaches. Some analysts believe Mr. Trump will cancel it. Losing the free entry to the U.S. will mean all goods now exported under AGOA duty-free will be subjected to tariffs and will significantly impact these countries' economic growth. The new tariffs, combined with the loss of AGOA, could see increasing inflation and the depreciation of currencies in these countries, economists warn. It's a hit that many countries will struggle to absorb.
Analysts are now looking towards the G20 in November in South Africa as a possibility to create new regional and global trade deals that do not include the U.S.
"I think we toss the U.S. out of the G20 for so many reasons and get tougher on Donald Trump to know collective will, that is the only response now," Patrick Bond, the distinguished professor and director of social change at the University of Johannesburg, told CBS News.
Earlier this week, on board Air Force One, Mr. Trump told reporters that he might skip the G20 altogether, saying, "I might send someone else because I have had a lot of problems with South Africa, they have very bad policies."
Mr. Trump has falsely claimed the country has race-based laws, with the government seizing white farmers' land. As a result, Mr. Trump has offered refugee status to Afrikaans farmers, which several hundred have already accepted and are now living in the U.S. The U.S. government is also unhappy with South Africa's case of genocide at the International Criminal Court.
With Thursday night's announcement of a 30% tariff for South Africa, it's clear the political tension between the countries now has economic consequences.
South Africa's Reserve Bank Governor, Lesetja Kganyago, had warned in mid-July that a 30% tariff would mean a loss of 100,000 jobs. Economists warn that the country's agriculture and automotive industries will be the hardest hit.
Bond warned South Africa could face a dire economic crisis if it doesn't shift quickly to diversify its export markets.
"We must diversify export markets and look at our own infrastructure projects and have massive subsidies for that," he said. "None of the approaches in our toolbox are working, so we must move to new options and protect our industries."
The South African government is concerned that the new tariffs will spark a lack of confidence in the market, bringing massive job losses and capital flight.
President Cyril Ramaphosa speaking Friday to media at the swearing in of a new police minister avoided being pinned down on a response to the tariffs saying only: "We deal with every government with the required respect and dignity and that is how we conduct our foreign policy and diplomatic matters and we expect that respect to be reciprocated" before conceding that "its too risky to be dependent on one country for trade."