In a late-night spectacle, President Trump rolled out a global tariff scheme, slapping South Africa with a hefty 30% fee while mentioning twice, ‘South Africa, they got some bad things going on…’
President Donald Trump on Wednesday unveiled global reciprocal tariffs during an event at the White House just before 10.30pm.
The highly anticipated announcement, which had markets and investment managers alike on tenterhooks included a 10% baseline tariff and ranged from 10% (UK and Singapore) to 49% (Cambodia).
South Africa will face tariffs of 30% and Trump mentioned twice that “some bad things are going on in South Africa…”
Other tariffs announced include 20% for the European Union, 24% for Japan, 26% for India and 34% for China.
Auto tariffs of 25% will apply to cars, light trucks, engines, transmissions, lithium-ion batteries, tyres, shock absorbers and even spark plug wires.
Speaking at an Old Mutual Investment Group quarterly investment update yesterday afternoon (before the reciprocal tariffs announcement), Old Mutual Investment group chief investment officer Siboniso Nxumalo said Trump’s trade tariff policy was about more than just protectionism. “he is using tariffs as a key revenue tool, with Elon’s Musk’s Department of Government Efficiencies (DOGE) symbolic of cost-efficiency. However, the implications for US and global economic growth are alarming,” Nxumalo said. “But if you set aside all the noise around the disbanding of USAid and US defence support for Europe, ultimately he has no choice given the size of the fiscal deficit.”
The US’s burgeoning debt deficit is coupled with higher interest rates, which makes further borrowing a huge challenge.
Nxumalo’s colleague and head of equities research, Meryl Pick emphasised that what we are inevitably seeing from the Trump administration is a reorientation of revenue through trade tariffs, rather than the introduction of new revenue. “History has shown us that tariffs have a negative impact on global growth. Unfortunately, Trump doesn’t seem to care about their growth implications; he is focused on fixing the US fiscus regardless of the negative consequences over the short- to medium-term,” she said.
The full chart of reciprocal tariffs announced by US President Donald Trump. Source: X
Some highlights of Trump’s remarks:
* “In many cases, the friend is worse than the foe in terms of trade,” Trump said.
* “We subsidise a lot of countries and keep them going and keep them in business,” Trump said about trade partners, specifically Mexico and Canada. “Why are we doing this? I mean, at what point do we say you got to work for yourselves.”
* “We are finally putting Americans first,” Trump said.
* “Trade deficits are no longer merely an economic problem. They are a national emergency,” Trump said. DM
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