Economies around the world are in limbo as America wages a trade war that its president Donald Trump says will make America great again.
Trump’s tariffs, particularly on Chinese imports, continue to reverberate through the global economy. Initially designed to address trade imbalances and protect American manufacturing, the long-term effects are becoming more apparent, not just for the US but for countries involved in global supply chains. You have to wonder whether Trump has thought about this. Maybe he has, and maybe he simply doesn’t care.
For the US, the immediate impact of tariffs has been a higher cost for consumers and manufacturers. Companies that rely on imported goods face increased production costs, leading to higher prices for everyday items, from electronics to clothing to bread. While the intention is to incentivise reshoring and correct trade imbalances and strengthen the US’s international economic position – as was the case in Trump’s previous presidential term – we may see many manufacturers opting to relocate production to other countries with lower labour costs or continue to import from China despite the tariffs. As a result, the promised boost to American domestic industries seems to be underwhelming so far. Time will tell, but there is certainly an air of hostility growing by the day with Trump’s antics.
Globally, the fallout is more complex. Emerging markets, particularly those with strong ties to China, have felt the strain as global trade slows. Countries in Southeast Asia, for instance, have seen shifts in manufacturing hubs, as companies seek alternatives to China. However, these regions face new challenges in adapting to the demands of reshaped supply chains.
For developed economies, the ripple effects are similarly disruptive. European Union countries, which maintain strong trade relations with both the US and China, have been caught in the middle. Increased uncertainty around trade policies has made it difficult for businesses to plan long-term investments. Moreover, the threat of further tariffs adds to the volatility, discouraging international trade – something nobody needs right now as economies still try to recover from the Covid pandemic.
In the broader context, Trump’s tariffs highlight a growing trend of protectionism, which could hinder global economic recovery. While the US may benefit in certain sectors, the overall effect may be a fragmented global market, with long-term consequences for efficiency and economic growth. Again, has someone told Trump this? Doubt he cares.
While tariffs don’t always have the outcome they are intended to have, for instance, a manufacturer may opt to move their manufacturing to a location exempt from import tariffs, this time around for the Trump Administration, well, no country seems exempt at this stage so that won’t be an option. All the while the cost of living is rising around the world – no country seems immune.
On page 18, you can read about the urgent need for the re-industrialisation of South Africa in a story titled ‘Boosting productivity and industrial growth to secure South Africa’s manufacturing future’. In that story and discussed at a recent Mining Equipment Manufacturers of South Africa (MEMSA) event, political-economic analyst JP Landman delivered a clear message to guests: “The problem is not the problem; the problem is productivity.”
While speaking specifically about mining and steel, he emphasised that South Africa must tackle its structural barriers to productivity, broken infrastructure, lagging human capital development, and failure to keep pace with global technological advancements as a whole if it hopes to sustain its manufacturing base.
It won’t be the first or last time this publication and its sister publication – Metalworking News – share these sorts of narratives.
While protectionism has its perceived subjective benefits, we must also always be mindful of the potential pitfalls too. As usual though, this issue is packed full of other positive and interesting content.
Damon Crawford
Online Editor / Journalist
