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Donald Trump’s return to the presidency signals a renewed push for aggressive trade policies and economic nationalism, potentially affecting global trade and South Africa’s economy, writes Handre Retief, a portfolio manager at Novare Holdings.
Donald Trump’s recent election win hardly registers as a shock. From the outset, Kamala Harris’s campaign was uninspiring at best, with much of her support likely driven by an anti-Trump vote rather than enthusiasm for her policies.
Still, many may wonder why more dynamic individuals could not be found among the 335 million people in the nation. Clearly, South Africa does not have a monopoly on poor political leaders.
Trump re-enters the Oval Office with a remarkable and controversial legacy for the world’s most powerful country: multiple criminal charges, two impeachments, and the notorious hush-money payment to a porn star. Yet, despite – or because of – this, he galvanised a passionate voter base, securing both his first popular vote win and a decisive Electoral College victory.
With his return, the question now shifts to the economic course his administration will take.
Trump has already signalled a return to his aggressive, protectionist trade policies, including new tariffs aimed at China and penalties on automakers and others who manufacture abroad.
The aim is to incentivise local production, a policy he claims will bring jobs back to American soil.
Inflationary tax cuts
Additionally, Trump may revive the 2017 Tax Cuts and Jobs Act (TCJA), with potential adjustments to make it permanent. This would reduce corporate and individual tax rates, likely boosting economic growth but also fuelling inflation.
Whether Trump delivers these changes with the determination promised on the campaign trail, remains to be seen. Parts of the tax cuts expire at the end of 2025 unless Congress extend or make them permanent.
While Trump’s policies may seem distant, their ripple effects could influence South Africa. His “America First” agenda, if followed through with vigour, might affect global trade flows and commodity markets, potentially disrupting South African exports. If US-China relations strain over tariffs, South Africa’s trade dynamics with both superpowers could face indirect consequences, albeit subtly compared to its domestic challenges.
If relations between the US and China strain over tariffs, then South Africa’s trade dynamics with both superpowers could face indirect consequences, albeit subtly, compared to the country’s domestic challenges.
However, if Trump’s policies succeed in accelerating US economic growth, South Africa may benefit from stronger global demand and a more stable global economic environment.
Looking inward-out
Trump’s return reflects a broader trend in global politics: a shift toward economic nationalism and a focus on practical, “bread and butter” issues like job creation, security, and immigration control.
This trend isn’t limited to the US; across Europe, nationalist movements have gained momentum.
Countries like Hungary, Poland, and Italy have embraced leaders and policies centred on sovereignty, economic protectionism, personal safety and scepticism of organisations like the European Union. Similarly, France’s far-right leader Marine Le Pen has gained influence, while the UK’s Brexit vote and policies remain emblematic of this nationalist wave.
For South Africa, this is a warning: people want tangible solutions to tangible problems.
South Africa faces many of the same issues driving this global shift – rising unemployment, persistent inequality, economic stagnation, and growing frustration with leadership. Daily reports of corruption, soaring levels of crime and a collapse in service delivery have eroded trust in government institutions.
If Trump’s economic nationalism succeeds, it could embolden South Africa’s leaders to pursue more isolationist or populist policies, potentially exacerbating the country’s challenges. Conversely, it could serve as a reminder of the importance of balancing pragmatism with inclusivity and global engagement.
As an emerging market, and a government with very limited resources, those in power have no choice but to choose their friends wisely. South Africa needs businesses to rebuild its economy and its people, but it also needs foreign capital to facilitate this, from several corners of the earth.
As the world watches the next four years unfold in the US, South Africa must not lose sight of its own urgent need for effective leadership, policies that prioritise the economy, and solutions that resonate with its people. The stakes are too high to ignore.
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