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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

Inauguration of Prof Francis Petersen as 14th Vice-Chancellor and Rector of the UFS
2017-05-23

Description: Prof Petersen Inauguration Charl Devenish photo Tags: Prof Petersen Inauguration Charl Devenish photo

Dr Khotso Mokhele, Chancellor of the UFS, robes Prof Francis Petersen as Vice-Chancellor and Rector of the UFS.
Photo: Charl Devenish

“At the UFS, we want to produce graduates for the world, and we need to ensure that we use our knowledge to uplift society”
— Prof Francis Petersen, 14th Vice-Chancellor and Rector of the University of the Free State (UFS)

On Friday 19 May 2017, the University of the Free State (UFS) celebrated the inauguration of its 14th Vice-Chancellor and Rector, Prof Francis Petersen. The formal inauguration was held in the Odeion Theatre on the Bloemfontein Campus. The ceremony was preceded by a week-long welcoming programme on the three UFS campuses.

The guest list included representatives from local and provincial government, vice-chancellors and rectors from across South Africa, and senior members of the university’s executive management.

During the inaugural address, Prof Petersen paid tribute to his predecessors for the role they played in making the university what it is today. This included former rectors and vice-chancellors who attended the ceremony, such as Prof Francois Retief and Prof Frederick Fourie, and Prof Stef Coetzee and Prof Jonathan Jansen who were unable to attend.

Prof Petersen characterised 2015 and 2016 as watershed years for the South African higher-education system. “The Rhodes Must Fall, and subsequent Fees Must Fall student and staff protests challenged us, and re-energised a critical engagement around the purpose of the university in an equal society, both as a site of complicity and as a potential agent for social change,” said Prof Petersen.

He committed himself to developing the UFS into an institution that will have an even greater impact than before.

“This institution I am striving to establish will be one that responds positively to inclusivity, diversity, and transformation, and which can incorporate these values into our curriculum, scholarship, and research in a productive way,” said Prof Petersen.

Prof Petersen emphasised the importance of the three-campus model. “The University of the Free State is ONE university with three campuses: the Bloemfontein Campus, our South Campus, and the Qwaqwa Campus. I am committed to align the activities of the three campuses, and to integrate our activities to a greater extent.

“We must work together to infuse each campus with the values we have identified as essential if we are to make our mark as a united University of the Free State: academic excellence, diversity and inclusivity, and innovation.”

The Chancellor, Dr Khotso Mokhele, had the honour of handing over the gown to Prof Petersen. Prof Lis Lange, Vice-Rector: Academic, explained the relationship between the university and the Basotho people, and how this relationship is honoured through the official procession gowns of the UFS. The Basotho blanket is worn by kings, and the university therefore hopes that the symbolism of the gown would be a source of inspiration to Prof Petersen.

The event was concluded by congratulatory messages from former colleagues and the President of the Student Representative Council on the Bloemfontein Campus, SK Luwaca. The event was elegant and graceful – the inaugural address was thought-provoking and inspiring.

 

Official Inauguration Ceremony:

19 May 2017
Bloemfontein Campus

 Description: Official Inauguration photo small Tags: Official Inauguration photo small


"I challenge you to dream big and do big." - Prof Petersen

 

Photo Caption: Dr Khotso Mokhele, Chancellor of the UFS, robes Prof Francis Petersen as Vice-Chancellor and Rector of the UFS.
Photo: Johan Roux

Short biography of Prof Francis Petersen
Inaugural address: 19 May 2017
Transcription of the ceremony
Photo Gallery
Video

 

Welcoming Ceremonies:

The week of 11-19 May 2017 was one of the highlights in this year’s calendar for staff and students of the University of the Free State (UFS), with various ceremonies taking place to welcome Prof Francis Petersen – who assumed his duties on 1 April 2017 – as the 14th Vice-Chancellor and Rector. The festivities culminated in the official inauguration ceremony at the Bloemfontein Campus on 19 May 2017.
 
The Qwaqwa Campus welcoming ceremony took place on Thursday 11 May 2017, attracting a wide spectrum of community leaders from the area. Prof Petersen was welcomed by representatives from the two trade unions, National Education Health and Allied Workers Union (Nehawu) and UVPERSU, as well as representatives from the Student Representative Council (SRC), the Thabo Mofutsanyana Education District, and the House of Traditional Leaders. Paramount Queen Mopeli of the Bakoena Royal House bestowed a special honour upon Prof Petersen by clothing him in a traditional Basotho blanket and hat. She said, "From our heart of hearts, welcome, Prof Francis ..., and all Godspeed during your tenure."
 
The South Campus in Bloemfontein hosted a welcoming ceremony for the new Vice-Chancellor and Rector on 18 May 2017. The ceremony included a number of vocal performances and messages from various stakeholder groups. The same afternoon, the Institute for Reconciliation and Social Justice (IRSJ) also facilitated a panel discussion, titled Diversity, inclusivity, and social justice and the renewed call for decolonisation, in the Albert Wessels Auditorium (AWO) on the Bloemfontein Campus.

The welcoming ceremonies culminated in an event in the Callie Human Centre on Friday 19 May 2017 at the Bloemfontein Campus, with a number of performances by musicians associated with the UFS, marimbas, drum majorettes from Jim Fouche Secondary School, the Grey College Gumboots, and school choirs from Eunice Secondary School, Brebner Primary School, and Willem Postma Primary School. Representatives from key stakeholders such as Nehawu, UVPERSU, the Campus Ministries Forum, SRC, Alumni, Convocation, and the UFS Council had the opportunity to convey their messages of welcome to Prof Petersen.
 
The formal inauguration ceremony took place in the Odeion Theatre on the Bloemfontein Campus the same day.

 

Qwaqwa Campus ceremony:

11 May 2017
Qwaqwa Campus

 Description: Prof Petersen with the queen 2 Tags: Prof Petersen with the queen 2

 

"Qwaqwa Campus is the perfect laboratory for sustainable sciences.” – Prof Petersen

 

Photo caption: Paramount Queen Mopeli of the Bakoena Royal House with Prof Petersen and his wife, Cheslyn.
Photo: Mamosa Makaya

Photo Gallery
Video

Read the full story
Transcription of the ceremony

 

South Campus ceremony:

18 May 2017
South Campus

 Description: South Campus welcoming Tags: South Campus welcoming

 

"South Campus: you aspire excellence, adding to diversity and you are innovative in what you do." - Prof Petersen

Photo caption: Flag bearers and drummers walking to the Madiba Arena.
Photo: Hannes Pieterse

Photo Gallery

Read the full story
Transcription of the ceremony

 

 

Bloemfontein Campus panel discussion:

Panel discussion: Diversity, inclusivity and social justice and the renewed call for decolonisation
18 May 2017
Bloemfontein Campus

 Description: Panel discussion 18 May 2017 Tags: Panel discussion 18 May 2017


"The UFS should be a place of belonging for everyone." - Prof Petersen

 

Photo caption: from left: SK Luwaca (SRC President, Bloemfontein Campus), Prof Elelwani Ramugondo (UCT), Prof Francis Petersen (UFS), Prof Melissa Steyn (WITS), Prof Andre Keet (UFS)
Photo: Lelanie de Wet

Photo Gallery

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Transcription of panel discussion



 

Bloemfontein Campus ceremony:

19 May 2017
Bloemfontein Campus

 Description: Bloem welcoming ceremony on 19 May 2017 Tags: Bloem welcoming ceremony on 19 May 2017


"I can just say, Wow! I've experienced a lot during the welcoming functions on all three campuses." - Prof Petersen

 

Photo caption: Prof Francis Petersen, Vice-Chancellor and Rector of the UFS
Photo: Rulanzen Martin

Photo Gallery

Read the full story
Transcription of the ceremony


 

 

Description: Inauguration and welcoming of Prof Petersen combined gallery Tags: Inauguration and welcoming of Prof Petersen combined gallery

Photo gallery of Inauguration and Welcoming Ceremonies

 

 

 

 

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