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07 April 2025 Photo Supplied
Dr Calvin Mudzingiri
Dr Calvin Mudzingiri, Assistant Dean: Faculty of Economic and Management Sciences, University of the Free State, Qwaqwa Campus.

Opinion article by Dr Calvin Mudzingiri, Assistant Dean: Economic and Management Sciences, University of the Free State, Qwaqwa Campus 


The sudden hike of import tariffs by US President Donald Trump and his administration to countries across the world is set to reduce the volume of goods traded and affect citizen welfare across the globe. The Trump administration implemented a global 10% import tariff and a varying targeted reciprocal tariff to a host of countries, including South Africa. The reciprocal import tariff to be levied on South African export goods to the US is set at 30%. Historical data show that yearly trade between SA and US amounts to $23 billion and the US is SA’s the second biggest trading partner after China. The high tariff will reduce the competitiveness of South African export goods to American markets, leading to reduced demand of SA exports in US markets, low income to firms, job losses, low income to households and ultimately lower South African economic growth.

 

SA and US trade

South Africa exports platinum, locally assembled cars, raw aluminium, ferroalloys and agriculture products, among other goods, to the US. The implication of the US administration’s 30% tariff hike could result in job losses in the mining, automobile, agriculture and many other industries. More income losses to SA agricultural exports can also be experienced if the African Growth Opportunity Act (AGOA) expires in September 2025, if the US congressmen decide not to renew the agreement. Given the low economic growth rate in South Africa in 2024, which is estimated at 0.6%, the tariff hike by the US will exacerbate sluggish economic growth and recovery from the COVID 19 pandemic. 

Statistics also show that SA imports energy products, machinery, vehicle, industrial and other consumer goods. The goods and services SA imports from the US play a critical role in developing and sustaining local industry. SA can decide to source the goods from other markets and if this happens with all economies where tariffs were imposed, the US will be worse off. There is a possibility that economies which received a tariff hike from the US will implement a reciprocal tariff hike to the US reducing the volume of global trade. The reduced trade volumes have dire implications for job creation, income generation by firms and households, making citizens worse off.


US current trade policy

It is important to note that President Trump administration’s trade policies are premised on a trade notion synonymous to ‘mercantilism’, which was practised in Europe between the 16th to 18th centuries. Under mercantilism, an economy aims to maintain a trade surplus, the government regulate the economy, discourage imports (in the case of the US using tariff hikes) and promote growth of home industries among other initiatives. Conventional economics wisdom has proved that policies pursued by the Trump administration of protectionism are a breeding ground for trade wars. There is great potential of fellow trading partners retaliating and if that happens, global citizens will be made worse off as they will be forced to pay high prices for goods due to additional costs driven by tariff hikes. In addition, US industry relies on raw materials from other countries. If the suppliers of raw material resources retaliate, the production cost model of US firms will rise, reducing export competitiveness of US exports.

Trump’s administration is calling for firms across the world to move and produce goods in the US to avoid tariff levies. The action works against the benefits of free trade and can affect firms’ comparative advantages. The production cost structure in the US can be higher than in other countries leading to firms realising low profits if they move to the US. It is essential to note that free trade with absolutely no trade barriers will enhance the welfare of citizens at large, since goods and services will be purchased at low prices. The US government’s act of over-regulating trade can limit economic growth not only of other countries but even that of the US economy.

 

Options for the SA government

In the face of trade adversity, the SA government must not fold its hands and do nothing. It is enlightening to note that the authorities have already initiated diplomatic and trade negotiations. Negotiations can possibly focus on tariff reduction, maintaining the AGOA, and delving deep in the logic used to arrive at the 30% tariff hike. The diplomatic initiatives must encompass improving perceptions and clarity of SA policies such as the Expropriation Act which is one of the reasons cited by the US administration in ratcheting the tariff trade war.

South Africa must re-orient its trading patterns and partnerships. The aggregate world gross domestic product (GDP) is greater than the US total production for goods and services. There is need for SA to improve trade relations with other economies to broaden its trade base. The current frosty trade relationship between SA and the US presents a window to strengthen trade with the EU, Asia, BRICS plus, Africa, and any other economy willing to get into trade partnerships. SA must explore other markets where the export goods still enjoy competitiveness.

To ensure economic resilience to trade wars in the long run, SA needs to seriously invest in research and development that promote value addition of local production, enhancing local production and technology advancement that can stimulate economies of scale, which can boost competitiveness of export goods. Competitiveness can be further enhanced by improving energy production efficiency, which is a crucial input of goods and services production. Developing a powerful and skilled human capital base can lead to labour productivity efficiency, further enhancing competitiveness. SA has a dilapidated infrastructure ranging from roads, rail, buildings and industry among others. Improving the infrastructure will go a long way in improving local production, leading to creation of jobs and improved incomes for households.

Boosting local economic activity can stimulate local consumption of goods as household income improves. If the incomes of SA citizens improve, there is a potential to increase local consumption. Goods meant for export markets can end up being consumed in the domestic markets, providing a homemade solution to dwindling export goods markets. The SA government must consider developing and supporting new industries that can compete in the local and international markets. In this way, the trade challenges posed by unfriendly US administration trade policies can present opportunities to the SA economy in the long run.

News Archive

During 2011: Prestige Scholars Programme (PSP)
2011-12-01

The University has designed the Vice-Chancellor’s Prestige Scholars Programme (PSP) to promote and support the intellectual breadth and depth required of young scholars to pose questions and generate knowledge in their disciplines and hence to occupy the vanguards of contemporary intellectual enquiry. The programme specifically targets members of the academic staff who are near completion, or have newly completed, their doctoral studies.

The goal is to select no more than 100 of the most promising young scholars and to make substantial investments in their development towards becoming full professors. A tailored, intensive programme of support is designated that combines international placement working alongside leading scholars in the discipline of the prestige scholar, with intensive mentorship and support from within the university.

 Description: 2011 PSP_Thuthuka  Tags: 2011 PSP_Thuthuka

Elite young scholars on the Vice-Chancellor’s Prestige Scholars Programme generated R1,2 million in National Research Foundation Thuthuka and Blue Skies funding in 2011 alone. Dr Katinka de Wet in the Department of Sociology was awarded Blue Skies funding for her work on the Hybrid Identity of the HIV/Aids patient. Thuthuka Grant holders Drs Cilliers van den Berg, Olihile Sebolai, Dirk Opperman and Diaan van der Westhuizen work in the fields of German and Afrikaans trauma literature, microbiology, structural and evolutionary biology, and architecture, respectively. This broad disciplinary range typifies the depth and extraordinary range of scholarship present among junior academics at the UFS.


 Description: 2011 PSP_Liza Coetsee Tags: 2011 PSP_Liza Coetsee

Dr Liza Coetsee, a Y2-rated physicist, is the first of the Vice-Chancellor’s elite cohort of Prestige Scholars to submit for National Research Foundation rating. Dr Coetsee works on the latest of the Nanotechnology Surface Science systems housed in our Department of Physics. As Prestige Scholar, Dr Coetsee conducts research on phosphor solar cells. Her aim is to establish a new Phosphor Solar Cell field at the University of the Free State with Proff. Hendrik Swart and Koos Terblans. As a member of the Prestige Scholar Programme, Dr Coetsee will work in collaboration both with colleagues from the Nelson Mandela Metropolitan University and Prof. Eray Aydil from the University of Minnesota and Editor-in-Chief of the Journal of Vacuum Science & Technology.


 Description: 2011 PSP_Olihile Sebolai Tags: 2011 PSP_Olihile Sebolai

Dr Olihile Sebolai is one of the 2 Vice-Chancellor’s elite Prestige Scholars and a microbiologist. In 2011, Dr Sebolai was awarded a Thuthuka Grant for his research on the yeast pathogen Cryptococcus neoformans, the cause of life-threatening Aids-defining illnesses such as meningitis. Dr Sebolai considers how cryptococcal lipids mediate infectious processes leading to illness. An understanding of these cellular processes will offer hope for future drug development to combat the scourge of cryptococcal meningitis, annually causing the death of over half a million people in Sub-Saharan Africa. Dr Sebolai is also interested in mapping the prevalence and distribution pattern of cryptococcal meningitis in the Free State. This, in turn, will assist health authorities to manage current infections and plan appropriately for potential outbreaks. The Prestige Scholars Programme, with the assistance of the National Research Foundation, will afford Dr Sebolai the opportunity to pursue his research in laboratories in the United States and India in 2012 and 2013.


 Description: 2011 PSP_Louis Holtzhausen Tags: 2011 PSP_Louis Holtzhausen

Dr Louis Holtzhausen, member of the Vice-Chancellor’s Prestige Scholars Programme, has been named by the South African Sports Confederation and Olympic Committee (SASCOC) as team doctor for Team South Africa during the All Africa Games, the largest sports event in Africa. National teams from African countries participated in 23 sports events. As an esteemed South African academic in sports medicine Dr Holtzhausens’ participation was an extension of the work already being done under his supervision at the UFS’s Sports Performance Unit. Many of the athletes who prepared at the Unit were also part of the team. Elite athletes’ illness and injury profiles are one of Dr Holtzhausens’ research focus areas. The exposure to this group in competition was of great value in the identification and development of research niche areas.


 Description: 2011 PSP_ Chantel Swart Tags: 2011 PSP_ Chantel Swart

The South African Society for Microbiology awarded Dr Chantel Swart-Pistor, a Prestige Scholar on the Vice-Chancellor’s elite programme, the top prize for her PhD during a recent gala dinner in Cape Town. Dr Swart-Pistor accomplished a breakthrough in the field of nanotechnology with The influence of mitochondrial inhibitors on zoospore and ascospore development. Her supervisor, Prof. Lodewyk Kock and co-supervisors, Dr Carolina Pohl and Prof. Pieter van Wyk, also stressed the important collaboration with Proff. Hendrik Swart (Physics) and Pieter van Wyk (Centre for Microscopy), which made Dr Swart-Pistor’s work possible. She has presented her work in Beijing (Medichem 2011) and Philadelphia (Biotechnology-2011). She has been invited to return to China in 2012.


 Description: 2011 PSP_ Lizette Erasmus Tags: 2011 PSP_ Lizette Erasmus

Dr Lizette Erasmus, scientific chemist and one of the Vice-Chancellor’s Prestige Scholars, has just returned from a three-month-long research visit to Prof. Hans Niemantsverdriet at the Technical University of Eindhoven in The Netherlands and the University of California, Davis. Dr Erasmus specialises in heterogeneous catalysis. Her visit to Prof. Niemantsverdriet, one of the global experts in the field of surface science, served to round of existing research. In California, Dr Erasmus visited her mentor, Prof. Bruce C. Gates, as part of the objectives of the Rector’s programme for the internationalisation of young researchers. Prof. Gates, an expert in catalysis, could contribute to Dr Erasmus’ research on the characterisation of heterogeneous catalysis and catalytic reactions. In exchange, her expertise in organometallic synthesis added value to Prof. Gates’ existing research. Their continued collaboration gave availed them of the opportunity for interdisciplinary interaction between engineering (Prof. Gates’ speciality) and chemistry, and promises to contribute to increased collaboration between the two universities in future.


 Description: 2011 PSP_Dirk Opperman Tags: 2011 PSP_Dirk Opperman

Dr Dirk Opperman, specialist in structural and evolutionary biology and National Research Foundation Thuthuka Grant holder, joined the Vice-Chancellor’s Prestige Scholars Programme after his postdoctoral work at the Max Planck Institute (KOFO) in Germany. Dr Opperman is the recipient of institutional seed funding to establish a protein crystallisation unit, which in turn led to the donation in 2011 of a multi-million Rand X-ray diffractometer¬ from the University of the Western Cape to complement his existing access to international synchrotrons. Dr Opperman is spending part of 2011 at the University of Exeter (UK) to further his research into the three-dimensional structures of specific enzymes and their trajectories of evolution to specific functions.


 Description: 2011 PSP_Abiodun Ogundeji Tags: 2011 PSP_Abiodun Ogundeji

Abiodun Ogundeji is a member of the Vice-Chancellor's Prestige Scholars Programme. Abiodun's work was recently recognised when he and his co-authors received an award for the best contributed paper at the 49th annual conference of the Agricultural Economics Association of South Africa on the topic, Impact of climate change on planning and dealing with flood disasters in South Africa: A case study of Soweto on Sea. The paper was co-authored by Prof. Giel Viljoen from our Department of Agricultural Economics and Herman Booysen, as well as Gawie du T. de Villiers, Research Associates in the Department of Geography. Abiodun is currently conducting invaluable research on the quantification of the economic value of climate change impacts and the benefits and costs of adaptation in South Africa.

 

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