People vote during the US presidential election at The Magic Castle Club in Los Angeles, California. Picture: Mario Anzuoni/Reuters
People vote during the US presidential election at The Magic Castle Club in Los Angeles, California. Picture: Mario Anzuoni/Reuters

US election stands to have a big impact on SA trade, foreign aid and pandemic recovery

By Opinion Time of article published Nov 3, 2020

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Colleen Ford

Spokane, Washington – The outcome of the US presidential election stands to drastically affect US foreign policy towards developing nations in Africa, particularly due to Donald Trump and Joe Biden’s differing approaches to solving one of the world’s most pressing issues: China.

If there’s one thing that both Biden and Trump seem to agree upon, it’s that the US needs a strict approach to China and the nation’s rising global influence. Both candidates agree that the eastern superpower has abused its economic power in the realm of international trade, but the method by which to remedy the issue is where the presidential candidates begin to differ.

Trump

Trump’s escalating trade war with China has long been aimed at undermining China’s influence in the US and creating a larger market for US producers. Raising tariffs on industries such as steel and aluminium in 2018 caused an immediate and major drop in Chinese export revenue, and the two nations have been locked in an ever-increasing trade dispute since.

The Trump administration has also hinted at withdrawing from the World Trade Organisation (WTO) over concerns that China has been taking advantage of trade rules set for developing nations.

Biden

Biden agrees that China’s strong presence in the US has negatively affected the American economy, especially with regards to manufacturing jobs. The democratic candidate supports the notion that trade with China must be restricted to keep the growing nation’s power in check, but his approach is more targeted.

Biden condemns the president’s aggressive tariffs on Chinese imports and posits that the strict blanket measures won’t solve the deeper issues at hand. Namely, the fact that China is making huge leaps in the realms of infrastructure, technology and energy that is making the nation a powerful ally for developing countries around the globe.

How the US-China relationship affects South Africa

The tumultuous US- China relationship has been shaking the foundations of international trade since China’s foreign policy reforms under Deng Xiopeng in 1976. The two major superpowers wrestle for influence in developing nations around the world in the technology, energy and infrastructure markets, and this competition often leaves these smaller nations trampled underfoot.

To drive matters home, the African Development Bank reported in 2017 that Africa was the second-fastest growing economy in the world, so it’s no surprise that the continent has been a battleground for US and Chinese presence.

Trade deals between China and the US affect African countries, as can be seen by the 2018 tariffs on steel and aluminium. South African aluminium exports accounted for 1.6% of US aluminium imports at the time the tariffs were imposed in 2018, according to Reuters, and despite being granted some tax exemptions from the high tariffs, South Africa’s aluminium industry took strain.

What the outcome of the US election could mean for South Africa

Although both candidates are sure to adjust their international policies post-election, there are a few things we can expect from a Trump or Biden presidency.

A Trump presidency could feature continued or escalated trade tariffs between China and the US as part of an increasingly-aggressive foreign trade policy. Trump has already shown through gradual withdrawal from international agreements that he is distrustful of foreign trade which, he argues, is unfairly pitted against the US economy. South African exports and imports between both the US and China may fall prey to the higher tariffs and expenses that ripple down as a result of the vicious back-and-forth between the two major nations.

The Trump administration’s Africa strategy has great emphasis on creating and maintaining foreign relations in order to prevent China from taking hold of developing countries. The US wants loyalty from African nations and a lack of competition with China, but when it comes to areas like infrastructure, roads, bridges and loans, the US just can’t compete.

Trump’s US International Development Finance Corporation (DFC) has the potential to greatly benefit African nations. The globally focused agency partners with the private sector to invest in solutions to issues plaguing developing countries in areas such as health care, infrastructure, technology and energy. While this is not an Africa-only initiative, there is potential for the US to invest in African nations if it chooses to do so.

However, Trump’s administration still focuses on competing with China in its foreign policy, even in developing African nations. If receiving US aid is dependent on cutting ties with China, many African nations could face losing US funding.

For example: the Africa Growth and Opportunity Act (Agoa), which gives sub-Saharan nations greater access to the US market, allowed South Africa to export more than $7.5 billion (R121bn) to the US in 2019 alone. Lesotho created more than 46 000 jobs in the textile industry because of this act, and if the Agoa is terminated then all those jobs are at risk of being lost.

A Biden presidency could see a more targeted approach to international trade instead of Trump’s more blanket approach. Biden’s approach is finding a strategy that supports US workers and creates alliances with nations which will serve to keep China in check.

Biden has criticised Trump’s broad tariffs and subsequent neglect of US-Africa ties, and instead calls for a more specific China-focused strategy. Biden aims to create a united front against China by strengthening US relationships with both developing countries and stronger nations, rejecting the Trump administration’s go-it-alone mindset.

This could mean that tariffs on South African exports would be lifted and that trade in and out of the continent could move more freely. The Democratic Party platform recognises Africa’s growing economy and states that a Biden administration would see support for economic growth, clean energy, public health, sustainable agriculture and pandemic recovery assistance.

Biden understands that China presents an attractive partnership because of their willingness to loan money straight to governments, a practice not followed by the US However, many poorer African nations suffer from crippling debt to China as a result.

Both Biden and Trump show support for the African Continental Free Trade Agreement (AfCFTA) which, when it kicks off in January 2021, will be the world’s second-largest free trade organisation, comprising all 55 members of the African Union. South Africa accounted for 25% of intra-African trade in 2017 and stands to benefit greatly from the agreement, although poorer countries may suffer from a lack of tariff revenue. The Trump administration has opened negotiations with Kenya on creating a bilateral free trade agreement, prompting questions of whether it could jeopardise the continent’s integration or aid in liberalising nations. While Biden also seeks to establish trade agreements in the same capacity, these agreements (from both Trump and Biden) would have to fall in line with both the AfCFTA and Agoa guidelines, meaning that progress would probably be slow-going.

No matter the outcome of the US general election, South Africa stands to benefit greatly from intra-African trade should AfCFTA run smoothly, potentially decreasing its reliance on exports to the US. However, US funding, foreign aid and trade with South Africa is at risk of being cut should Trump win another four years in office. His feud with China and retaliatory isolationist mindset could cost South Africa billions in tariffs and resulting job losses.

While many applaud Trump’s stubborn attitude toward China and refusal to bend to the superpower’s influence, countries like South Africa end up feeling the effects of the president’s “America First” mindset. With foreign aid already slashed by a third and an unlikely chance for receiving aid for pandemic recovery, South Africa stands to suffer as collateral damage in the fight between the US and China should Trump remain in office.

Should Biden win, he promises to strengthen alliances with developing nations like South Africa to stand up to China’s influence as one united front. Although Biden’s US foreign policy might not be as strict on China as Trump’s might be, there should be more room for foreign relationships, diplomacy, aid and economic support for the other countries in the world that Trump seems to have forgotten about.

* Colleen Ford is a freelance writer, from Pretoria who now lives in the US north-west.

** The views expressed here are not necessarily those of IOL.

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