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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

Dr Francois Deacon appears in international film, Last of the Longnecks, due to research on giraffes
2017-04-04

Description: Giraffe research read more  Tags: Giraffe research read more

Dr Francois Deacon was invited by the producer of Last
of the Longnecks
to be part of a panel handling a question-
and-answer-session about the film.
Photo: Supplied

A great honour was bestowed on a researcher at the University of the Free State (UFS) when he was invited to the preview of the documentary film, Last of the Longnecks. Dr Francois Deacon, lecturer and researcher in the Department of Animal, Wildlife and Grassland Sciences at the UFS, who also has a role in the film, attended the preview at the Carnegie Institution for Science’s Smithsonian National Museum in Washington DC, in the US, in March this year. The preview formed part of the DC Environmental Film Festival.

The Environmental Film Festival in the US capital is the world’s leading showcase of films with an environmental theme and which aims to improve the public’s understanding of the environment through the power of film. During the festival, the largest such festival in the US, more than 150 films were shown to an audience of 30 000 plus. 

Dr Deacon was invited by the producer of Last of the Longnecks to be part of a panel handling a question-and-answer-session about the film directly after the show. He described it as the greatest moment of his life. 

Role in the film Last of the Longnecks

“My role in the film was as the researcher studying giraffes in their natural habitat in order to understand them better, so that we may better protect them, and be able to provide better education on the problem in Africa,” says Dr Deacon. 

“Together with Prof Nico Smit, also from the UFS Department of Animal, Wildlife and Grassland Sciences, Hennie Butler from the Department of Zoology, and Martin Haupt from Africa Wildlife Tracking, we were the first researchers in the world to equip giraffes with GPS collars and to conduct research on this initiative,” he says. This ground-breaking research has attracted international media attention to Dr Deacon and Prof Smit. 

“Satellite tracking is proving to be extremely valuable in the wildlife environment. The unit is based on a mobile global two-way communication platform, utilising two-way data satellite communication, complete with GPS systems.

“It allows us to track animals day and night, while we monitor their movements remotely from a computer over a period of a few years. These systems make the efficient control and monitoring of wildlife in all weather conditions and in near-to-real time possible. We can even communicate with the animals, calling up their positions or changing the tracking schedules,” says Dr Deacon.

The collars, which have been designed to follow giraffes, enable researchers to obtain and apply highly accurate data in order to conduct research. Data can be analysed to determine territory, distribution or habitat preference for any particular species.

Over a period of three years (2014-2016), the Last of the Longnecks team from Iniosante LLC captured on film how Dr Deacon and his team used the GPS collars in Africa to collect data and conduct research on the animals.

“With our research, which aims to understand why giraffes are becoming extinct in Africa, we are looking at the animal in its habitat but not only the animal on its own. If the habitat of these animals is lost, they will be lost as well. Therefore, our focus is on conservation and better understanding the habitat. The giraffe is only a tool to better understand the habitat problem,” says Dr Deacon. 

Since the beginning of his research Dr Deacon and his team have had six new collar designs, with animals in four different reserves being equipped with the collars. The collars use the best technology available in the world and make it possible to determine how giraffes communicate over long distances, and how their sleep patterns function. Physiological and biological focus is placed on the giraffe’s stress levels, natural hormone cycles, and milk quality in cows. 

Description: Giraffe 2017 Tags: Giraffe 2017

Photo: Supplied

Experience at the film festival

“Absolutely amazing. Totally beyond our frame of reference as South Africans.” This is how Dr Deacon describes his experience of the three days in Washington DC during the film festival.

“It was an absolute honour to be part of the global preview of the film and to be able to work with Ashley Davison, the director of the film, and his team. I am just a rural farm boy who dreams big, and now this dream is known worldwide!” he says. 

The film, which will be launched in April, will be screened in South Africa on the National Geographic channel in May 2017. Meanwhile, the film will also be shown at eight other film festivals in the US. 

Work will start on a follow-up documentary in October and Dr Deacon is excited about the prospect. A mobile X-ray machine will be available from October. Internal sonars could also be performed on each of the animals. Researchers from around the world will form part of the team which will be led and co-ordinated by Dr Deacon and his co-workers at the UFS.

Former articles: 

18 Nov 2016: http://www.ufs.ac.za/templates/news-archive-item?news=7964 
23 August 2016: http://www.ufs.ac.za/templates/news-archive-item?news=7856 
9 March 2016:Giraffe research broadcast on National Geographic channel
18 Sept 2015 Researchers reach out across continents in giraffe research
29 May 2015: Researchers international leaders in satellite tracking in the wildlife environment

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