The executive orders imposed by the United States’ (US) new administration are a wake-up call for the global community, serving as a clear reminder that maintaining economic stability and growth in today’s interconnected world requires cooperation and respect in trade policies.
The US’ 20% tariff on Chinese imports will lead to supply chain instability and disrupt international trade.
The trade war represented a significant shift in US foreign policy.
If a US importing company increases the retail pricing of a product for the person buying it in the US, we also need to understand that the US consumer will be the one who would have to pay a higher price.
The global economy will suffer because of these tariffs, not just China.
Furthermore, the US is particularly concerned about the increasing number of developing countries seeking alternatives to the dollar.
Emerging nations are discouraged from joining Brics (Brazil, Russia, India, China, and South Africa) and the US government has threatened to impose 100% tariffs if developing countries stop using the US dollar as their global currency.
Countries are attempting to maintain stable trade relations in the face of this trade war and complicated international relations. The interdependence of modern economies emphasises the need for cooperative strategies to promote stability and advancement in a trading environment that is becoming more polarised.
CHINA’S RESPONSE
On 4 March, the Chinese foreign ministry called the US’ tariff policy unjustified, urging the US to take its own interests into consideration.
Even so, imposing new high tariffs on China presents an opportunity for China to expand trade relations with other countries.
As Africans, we must remember that China can bridge gaps in development, improve local economies, attract foreign investment, expand the private sector’s growth and competitiveness, and strengthen international integration.
The ongoing trade conflict over tariffs in China might indirectly affect global trade, but the country’s reform initiatives will level the playing field and improve market access.
The Chinese economy will persevere in defying doubt and offering stability to the world and to itself.
As such, African leaders must use economic diplomacy to build a strong partnership with China, while balancing its expectations with the US’ transactional approach.
AFRICA’S POSITION
Africa’s potential for exports may be constrained by these tariffs, notably in sectors like agriculture and mining and for local and small businesses.
Tariffs may increase prices and lower African exports’ ability to compete globally. Retaliatory tariffs from trading partners are driving up import prices, which is putting pressure on consumers and businesses alike and escalating worries about an overall economic slowdown.
In addition to endangering the collective good, imposing tariffs on China and the rest of the world could incite a trade war with the US and the international community.
China, the world’s second-largest economy, has proven it can withstand external shocks and will cooperate with the international community to find common ground, adopt win-win strategies and reduce reliance on Western markets.
China places a high priority on maintaining a stable fiscal policy, which will prevent unnecessary economic disruption even if external circumstances necessitate currency adjustments.
The US must realise that, although imposing tariffs might serve short-term policy interests, it will ultimately exacerbate economic and social problems.
A collaborative strategy that prioritises equitable competition and shared prosperity is more sustainable.
Imposing tariffs on China is a dangerous step that could cause global economic instability while ignoring the core problems at hand. There is no winner in a trade war, as history shows.
- Josef Sheehama is a banking expert.
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