Trump: What are consequences for African economies?

Donald Trump’s election as US President is likely to make the world’s biggest economy more inward-looking, more protectionist and acting more unilaterally in global affairs.

The world may potentially become more dangerous if Trump implements some of his policy statements issued during his presidential election campaign.

Early in 2016, the Economist Intelligence Unit (EIU) rated a forthcoming Trump presidency as one of the top 10 highest global risks, warning he could disrupt the global economy, and increase political and security tensions.

The EIU rated a Trump presidency at the same level of a risk as “the rising threat of jihadi terrorism destabilising the global economy”.

Trump’s predecessor Barack Obama has pursued a global strategy of positioning the US at the head of a rule-based world order, pushing US-style liberal democracy, globalised free trade and a United Nations-based multilateralism, which developing countries have criticised for favouring the US and industrial countries to the disadvantage of developing countries.

It is very likely that Trump may disrupt the Obama legacy.

Trump has threatened to curtail trade, with especially, China, with which the US runs a trade deficit. If the Trump-led US does indeed restrict trade, it will undermine the global economy, slowing growth.

US economist Paul Krugman has already warned that the Trump presidency may trigger a global recession.

A slowing global economy will undermine growth in African economies. African economies are heavily dependent on a growing global economy, which in turns increase the chances of industrial and developing countries buying African resources.

Trump could trigger a trade and currency war between the US and other countries…

Trump has vowed to introduce a “defensive” 45% tariff on Chinese imports, lodge trade complaints against the Chinese dragon at the World Trade Organisation (WTO) and declare China a currency manipulator.

If Trump retaliates against China, it will not only undermine growth in the Chinese economy, but growth in other countries too, especially Africa and emerging markets.

The past year have already seen African economies, especially those that are commodity exporters, slowing down because of a slowdown in the Chinese economy, which has been the largest buyer of African commodities.

A further slowdown in the Chinese economy, this time triggered by Trump policies will depress China’s buying of commodities – which may in turn cause further shocks to African economies.