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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

Official opening ceremony of the UFS Qwaqwa Campus
2006-02-15

Official opening ceremony of the UFS Qwaqwa Campus
11th February 2006 – Multipurpose Hall

Opening Speech:
Prof. Peter A. Mbati
Campus Principal

Successfully rising to the challenges of incorporations and mergers – developing a vibrant and academically stimulating satellite campus of the University of the Free State.

Thank you Mr. Program Director and good morning ladies and gentlemen.

I wish to once again welcome all of you to the official opening ceremony of the University of the Free State QQ campus.  Thank you for taking time to share with us an important date in our campus academic calendar.  I bring you greetings from our Rector and Vice Chancellor Prof. Frederick Fourie.

During such occasions we try and reflect on important matters that have affected us as an institution in the preceding year, commit ourselves to specific objectives for the current year, while planning for the proceeding year.

Today I shall be talking on Successfully rising to the challenges of incorporations and mergers – developing a vibrant and academically stimulating satellite campus of the University of the Free State’.

SRC inauguration
I would like to congratulate the SRC President and the entire SRC leadership for being elected into important positions of student leadership and authority. 

As a university we are proud of the quality of our student leadership on the Qwaqwa campus.  I am confident that you young leaders will rise to the challenges of your office and discharge your duties with diligence and without fear or favour.  That you will rise above your party affiliations and provide effective leadership to the entire student body on campus.
                              
Leadership is complex and requires you to be objective, just and fair in your approach to the many challenges that you will encounter.  You will be judged not by the populist decision that you take when confronted with difficult choices, but rather, on the wisdom that you exercise in reaching consensus in decision making processes.

The era when management and student leadership viewed each other with suspicion and as adversaries is long gone.  Management, academic and administrative staff, parents and students must have common agendas in as far the  quality growth and development of our university is concerned and to strive towards academic excellence.  I leave the challenge to you students, and more so to the inaugurated student leaders to define your agenda in achieving this noble objective.  I trust that you will make the right choices.

Brief history of incorporation
On the recommendations of the National Working Group of Higher Education, the Qwaqwa Campus of the then University of the North was incorporated into the University of the Free State on 1st January 2003.  We suddenly had to move from a campus that was originally semi-autonomous and with its own culture developed over almost 20 years, into a campus that had to operate as a fully integrated campus of the UFS, a 100 year old institution with its distinct culture.

Following incorporation, we not only had to continue with our core business of teaching, learning, research and community service, but we also had to engage in other important aspects such as exploring the most appropriate models of governance for the campus, encouraging dialogue and interactions at all levels between personnel at the different campuses with a view to developing trust between colleagues. And with the added dimensions such as participation in the transformation task team we in effect are at the fore front of developing a new institutional culture at the UFS and a truly South African University.

UFS Strategic objectives
The strategic and transformation priorities of the University of the Free State for 2006 – 2008 as approved by the Executive Management at its retreat in January 2006 are:

  • Quality and Excellence
  • Equity, diversity and redress
  • Financial sustainability
  • Regional co-operation and engagement

Central to this priority is the integration of the Qwaqwa campus as a valuable constituent part of the UFS, and the strategic reconfiguration of the campus in order that the UFS can play a meaningful role in regional engagement and development.

  • National leadership

The five strategic objectives cannot be viewed in isolation and run simultaneously and in concert with each other. 

The Question must therefore be what we on the QQ campus, staff and students, parents and our broader community are willing to do to achieve these strategic objectives. The reconfiguration and strategic planning of this campus, and therefore its success, must be a collaborative effort between colleagues at QQ and on the main campus.  We must all be ready to work together, to plan together, to shoulder responsibilities together and sometimes, to share the pain and disappointments together. 

The second question must therefore be: are we prepared to go that extra mile for our campus to ensure that we claim our rightful stake within the ranks of well respected academic institutions of higher learning in this country?  At this point in its history this campus requires committed men and women from across the cultural spectrum who appreciate the challenges ahead of us and who are ready to give of their best and to constructively engage at all levels to make this dream a reality.  Because this dream is possible and this dream will be realized!

Quality and Excellence (1st strategic objective)

As mentioned by the Rector in his speech at the official opening ceremony of the university on the main campus on Friday 3rd February, the university will in 2006 pay extra attention to Quality and Excellence.  This is informed by the Higher Education Quality Committee’s (HEQC) institutional audit which is scheduled to take place this year.  Our university as well as several other HEI’s will be subjected to this audit.  This will call for a lot of hard work on your part in preparation for a successful audit and in this regard therefore I request for your cooperation.

As a further step in confirming our commitment to quality and excellence, we have simultaneously introduced on the QQ campus and the main campus workshops on performance management systems to a cohort group.  This will be expanded in 2006 to a wider group of managers on the QQ campus to include among others all Program Heads and Subject Heads. PMS is an invaluable tool for fair, effective and efficient management of a very important resource on campus – the human resource.  Benefits of PMS include among others:

  • Instilling and enriching a culture of performance management (quality assurance) as an integral part of the day to day functioning of staff at the campus
  • Improving staff performance through mentoring, development and training

Tri campus project
One of the more important projects that we as a university undertook in 2005 was the Tri Campus Project which was coordinated by the Free State Higher Education Consortium (FSHEC) through Niel Butcher and Associates consultants.

The Tri-Campus project focused on the strategic planning for higher education campuses in the Free State that have been incorporated with UFS and CUT during the reshaping of the South African higher education landscape. The Bloemfontein Vista campus and the Qwaqwa campus of the University of the North were incorporated with the UFS, and the Welkom Vista campus with the CUT.

The planning process involved a range of research and consultation activities during the course of 2005. This included:

  • Conducting situational analyses of the Qwaqwa campus during which staff and students were widely consulted;
  • Consulting with the campus and with a range of stakeholders in the sub-region
  • Review of the Free State Provincial Growth and Development Strategy and Integrated Development Plans (IDPs) of the regions and other research of relevance to the sub-regions, province and country.

An operational framework for the reconfiguration of the campus with a range of possible Program Qualification Mixes has been produced.  In December 2005, the Rector, the Vice Rector Academic Planning Prof. Magda Fourie and I discussed this document with senior members of the DoE in Pretoria, and we will soon be meeting with the National Minister of Education Me Naledi Pandor for her guidance and to seek support in the further refinement of the document and subsequent implementation.

Recapitalization
This year a further R 6 M has been budgeted for recapitalization.  In about two weeks time the third of phase of renovations on campus will commence and attention will be given to the administration building, the humanities and the outstanding work in the lecture hall complex.  There- after the library, sciences and education buildings will follow.  As you will recall a substantial portion of the R 8.4 million in 2005 was used to upgrade the student residences and the lecture hall complex.

I am certain that the renovations and upgrading of our infrastructure and physical facilities including landscaping will create an enabling environment for you to enjoy your work and studies on this campus.

Renovations come with some measure of inconveniences and I therefore wish to request for your patience and support during this period.

Closing remarks
There is a heightened spirit of optimism on what the future holds for this campus.  This is evident when I talk to a large cross section of staff and students of this campus – and I therefore invite all of you to come and be partners with us on this journey of optimism and hope of what the future holds for the UFS – QQ campus.

Thank you and God bless!

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