The saying, “When America sneezes, the world catches a cold” might still be true as global markets and agricultural trade brace for turbulence under Donald Trump’s presidency. In South Africa, the agriculture sector is torn between prepping for a storm and carrying on like it’s business as usual.
On his first day in office, Trump wasted no time signing a stack of executive orders, many expect to leave their mark on international trade and business.
The Western Cape minister of agriculture, economic development and tourism, Dr Ivan Meyer, has flagged potential implications for the province.
“I have a keen interest in how global geo-political developments will affect agriculture, food security, economic development, tourism, market access and exports to the rest of the world.
“It is still early days but here are some implications of the Trump administration [these include] protectionism, trade barriers and tariffs, market access and exports, Agoa, climate change funding, disaster and risk mitigation, global supply chain management, and transactional economic politics,” Meyer said.
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Trump’s tariff threats
As the United States’ 47th presidency unfolds, Donald Trump has already threatened to issue 25% tariffs on goods from Mexico and Canada, with China also at risk. When Trump imposed tariffs on China in 2018, US soybean, maize, and pork farmers felt the impact as China shifted its orders to Brazil and Argentina.
In light of these developments, Wandile Silobo, Agbiz’s chief economist, remains hopeful that South Africa will avoid the worst of the fallout but urges farmers to closely monitor shifting US trade policies.
“If president Trump follows through with promises of high import tariffs on China and China retaliates, there will be volatility in global oilseeds and grain prices.
“US farmers will likely feel more pressure than other regions. The South American farmers stand to benefit as an alternative source for China to procure soybeans,” Sihlobo said.
While South Africa does not directly compete in US grain markets, Sihlobo adds that the risk lies in US farmers shifting focus to South Africa’s traditional Far East markets, intensifying competition and pushing prices down.
“This, too, is something we will have to monitor closely… Whether the US imposes any other import tariffs that could directly affect the South African farming community remains to be seen,” Sihlobo added.
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