Upon assuming office as the 47th President of the United States, Donald Trump swiftly enacted a series of executive orders, with a major focus on trade policy. One of his most significant moves was increasing tariffs on key trading partners. While the proposed 25% tariffs on Canada and Mexico were eventually halted, a 10% tariff on Chinese imports remains in effect.
Trump justifies these tariffs as a revenue-boosting measure that will ultimately benefit the U.S. economy, despite potential short-term inflation. However, beyond its immediate impact on U.S.-China trade, this move has far-reaching consequences–particularly for African economies.
The Tariff’s Implications for China and Global Trade
China has long been the U.S.’s largest trade deficit partner. In 2024, the U.S. trade deficit with China stood at $295.4 billion, surpassing the combined deficit with Canada and Mexico,which are US top trading partners. Historically, U.S. tariffs on Chinese goods have aimed to reduce this deficit and encourage domestic production. However, the latest tariff increase could:
- Slow China’s economyby reducing export volumes to the U.S., which if not properly and timely addressed could lower the country’s foreign inflows and further lead to crisis in the forex.
- Trigger retaliatory tariffs from Beijing, affecting American businesses and global supply chains.
- Increase inflation in the U.S., as businesses pass on higher costs to consumers, more threatening for goods that are highly inelastic.
- Destabilize global trade, creating uncertainty for emerging markets, including many Africacountries such as Nigeria, Egypt, South Africa and Aleria.
Fig. 1: US Trade deficit with China compared with Canada and Mexico
(top US trading partners)
Why Africa Should Pay Attention?
At first glance, one might assume that the reduction in U.S.-China trade could benefit Africa by making Chinese goods more accessible. However, the reality is more complex:
- Limited Trade Substitution:The types of products China exports to the U.S. (such as high-tech goods and industrial machinery) do not align with Africa’s primary import needs. This means Africa is unlikely to benefit from possible resulting surplus of Chinese goods in this situation.
- Decline in Financial Flows:Africa is deeply connected to global trade through remittances, foreign investments, and aid. A slowdown in China’s economy and possible inflationary trend in the US could indirectly reduce funding and flows into African economies.
- Possible Trade Restrictions on Africa:Given the S. trade deficit with South Africa and Nigeria, Washington could extend protectionist measures to African economies in the future.
Fig. 2: US Trade deficit with Nigeria and South Africa
(US top trading partners in African)
What Africa Must Do
To mitigate these risks, African economies must proactively strengthen their resilience against external shocks. Key strategies include:
- Investing in Local Industries:Reducing dependence on foreign imports by increasing domestic manufacturing and production capacity.
- Diversifying Trade Partners:Expanding trade relationships beyond traditional partners like China and the U.S. to reduce vulnerability.
- Strengthening the African Continental Free Trade Agreement (AfCFTA):A robust intra-African trade network will provide a buffer against global trade disruptions.
Trump’s China tariffs are not just a U.S.-China issue, they have wider economic implications that could ripple across African markets. Instead of waiting for the fallout, African economies must take strategic steps to insulate themselves from global trade volatility and turn challenges into opportunities. Strengthening AfCFTA and boosting local industries will be critical in ensuring Africa is not disproportionately affected by shifting U.S. trade policies.
