Ivo Vegter on US election 2024: High stakes for South Africa, who will rue a Trump presidency

05 Nov 2024, 09:57 by Editor BizNews · BizNews

The 2024 US presidential election is a critical event with potential global consequences. Both Trump and Harris represent polarized visions for America’s future, affecting not only US citizens but also international trade partners, including South Africa. A Trump victory risks protectionist trade policies, a weakened rand, and strained U.S.-Africa relations. Harris, while imperfect, offers a centrist approach that could maintain global stability and economic openness. South Africa’s prosperity hinges on these outcomes.

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By Ivo Vegter*

Today, the United States will wake up to the big day: Election 2024.

When the counting’s over, the court cases will begin. When the verdicts settle and the settlements land, over 150 million Americans will have voted. The vast majority of those will have chosen either Donald Trump, who represents part of the Republican Party, or Kamala Harris, representing 99% of the Democratic Party.

A small number will have been fools, supporting irrelevant third parties. Third-party votes usually hurt the prospects of whoever these voters’ major-party choice would have been.

Nobody knows where the chips will fall. Nobody knows who will win. It could go either way.

Critical

To date, I’ve written about the U.S. elections mostly from a US or global perspective. I’ve pointed out the many reasons why the US will rue a Trump presidency. (There are more, but the internet ran out of space.)

I have been critical of Harris over her ideas on price gouging, her approach to housing, and her tax policies. I have also been critical of the conservative intelligentsia’s plan for a religious-conservative Republican presidency, of Trump’s weird running mate, of his idiotic claim that tariffs are taxes on other countries, and of his overt racism towards even legal immigrants.

It’s a choice between two evils, but one is far more evil than the other. A Trump presidency, if unsuccessful, would be a set-back for classical liberal values such as free trade, religious tolerance, women’s emancipation, women’s and trans health, gay rights, and the relative freedom of labour to move across borders. If successful, it could result in a full-blown white-nationalist religious-fundamentalist police state.

Economically, I agree with the numerous economists who believe that Trump’s policies will lead to worse outcomes on inflation, interest rates, the budget deficit and national debt, as well as higher prices for working- and middle-class Americans.

I also pointed out that Elon Musk, tapped by Trump to lead a Department of Government Efficiency (DOGE; no, really, DOGE), has warned that the US will be in for a significant crash should Trump win. He promises that it’s only temporary, but temporary crashes hurt too, you know?

Granted, I’d like a Milei-type figure to take an axe to bloated US government bureaucracies and suffocating red tape. I’d like to see stronger support for Israel from the US. I’d like to see the US pull out of the costly and ineffective Paris Climate Agreement.

On the other hand, I don’t want to see the US step on Ukraine’s neck, nor do I agree that the US economy is in such dire straits that it needs painful surgery and heavy-handed protectionism. It isn’t in dire straits at all.

Fear and loathing

In short, my position is that I don’t particularly like Kamala Harris, but I don’t fear her. She’s gone quite centrist and will likely bumble along like centre-left leaders do. Historically, and counter-intuitively perhaps, Democratic presidents have been quite good for the US.

I don’t like Donald Trump either. In fact, I rather loathe him. But I also fear him.

I fear his economic policies. I fear his pandering to religious extremists and moral conservatives, especially on women’s rights, LGBT protections, and immigrants. I fear his demented narcissism and his meandering waffle. I fear his authoritarian instincts, his big-man machismo, his open admiration for dictators, and his vengeful tirades not only against political opponents, but even at the poor sound crews at his events.

I fear the Christian nationalism and nativism of many of his supporters. And I fear that Trump will have a heart attack and leave the Catholic extremist freakshow JD Vance in charge.

I think the US government could be smaller and less interventionist, but not so much that the only option is to burn it down no matter the consequences.

I fear Trump, but I do not fear Harris. I don’t usually end up supporting Democrats for US president, but I’m happy to make an exception if it preserves some semblance of a civilised liberal democracy and it results in a stronger U.S. economy.

South African impact

What I haven’t addressed in much detail is why all this matters to South Africans.

It’s hard to say with much certainty, since neither candidate has said very much about their policies on Africa, let alone on South Africa in particular. One can easily extrapolate some consequences from history and their policy proposals, however.

Trade wars

Trump wants to impose tariffs of between 10% and 20% on imports from everywhere. Presumably, that includes from African countries, although he’d probably have to convince Congress to repeal or amend the African Growth and Opportunity Act (AGOA) to achieve that.

Tariffs are a tit for tat thing. In principle, everyone knows that even unilaterally reducing trade tariffs benefits both parties to the trade (since all it does is increase the cost of doing business), but governments insist on using trade tariffs as bargaining chips against each other.

This is why, instead of just reducing trade tariffs like smart people, the fools in charge needed, first, a General Agreement on Tariffs and Trade, and later a World Trade Organisation, to lower global tariffs and grow free trade.

Trump wants none of that. His policy is “America First”. It’s mercantilist and protectionist. He’s a sort of modern-day Oliver Cromwell.

His economic illiteracy is evident in his view on trade wars: “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!”

Nobody will trade if they lose money on the trade. A trade deficit is not a “loss”, any more than a tariff is “a tax on another country”. Foreign exporters do not pay import tariffs. Domestic importers do.

Great Depression

The last time the US tried its hand at a global trade war that involved raising tariffs on all imports was in 1930, with the Smoot-Hawley Tariff Act. It only served to deepen and prolong the Great Depression. Global trade fell by 65%. It was catastrophic for America and the world.

By the end of the 1930s, the US was furiously negotiating bilateral trade deals in order to claw its way out of the hole it had dug for itself. Turns out winning trade wars wasn’t so easy, after all.

Don’t get me wrong. Democrats are no angels when it comes to tariffs. But Trump’s across-the-board tariff proposal (plus extra tariffs on Chinese imports) would return trade barriers to highs not seen since the Great Depression.

And I’ll bet money that Trump has never read a history book that covered the Smoot-Hawley tariffs of the 1930s. He isn’t exactly the reading type. He’d rather be out golfing while he ruins the economy on some intuitive feeling about what would be good for American businesses.

South African export trade is likely to get caught in the crossfire of Trump’s global trade war. After China, the US is South Africa’s second-largest trade partner for both exports and imports. It represents eight percent of both.

In monetary terms, the South African Revenue Service reports that South African exports to the U.S. in September 2024 amounted to R13.7 billion rand. For just one month.

Demand goes down as prices rise, so South African exporters will bear the consequences if the Trump administration raises prices for US importers by 10% or 20% by means of import tariffs.

Benefiting China

Ironically, Trump’s trade war focus on China might actually benefit China. Although a 60% tariff on Chinese imports would obviously harm US-China trade, the universal tariff on all other imports will cause all other US trading partners to raise tariffs on their US imports, too. Tit for tat, remember?

As a consequence, Chinese goods will be more competitive in third countries compared with imports from the US. The US, despite its size, is only a minority player in China’s export market. If everyone else finds it more expensive to trade with the US, China would emerge the winner of the Trump trade wars.

US import tariffs would drive up input costs not only for American manufacturers who source parts from abroad, but also for those who source inputs locally, because local producers are free to raise prices in the absence of cheaper imports. So, the cost of manufacturing in the US, goes up, which raises prices. That inflation tends to get exported, affecting the whole world, including South Africa.

Weaker rand

The rand is also likely to weaken if Trump wins. That will bring some relief for exporters suffering under US import tariffs, but only by transferring the pain to South African companies and individuals that rely on imports. This, too, will raise prices in South Africa.

Besides global trade fragmentation, trade tensions, and a weaker rand, there will be other financial market implications, such as a shift in investor sentiment away from emerging markets, raising the cost of capital for South African companies.

“Shithole” nations

Trump views African countries as “shithole” nations (though he denies it, which nobody believes).

Trump’s insular instincts are unlikely to produce a well-considered policy towards Africa. Trump isn’t a winning hearts and minds type. He’s more of an extortionate robber baron type.

He’ll try to pressure African countries into favouring the US in particular. I don’t think many African countries will take kindly to his approach, which means they are likely to drift further into the orbit of China and Russia.

This, too, will be bad for South Africa.

Mexico City Policy

Since 1985, during Republican presidencies, foreign aid for healthcare in Africa was conditional on the funding not going to any organisations that performed (or even discussed) abortions, even if they used funding from non-US sources to do so.

Informed by the religious right, this was called the Mexico City Policy. Democratic presidents, each time, rescinded the policy, and Republican presidents, including Trump, re-imposed it. Trump, in his first term, extended this policy to the US President’s Emergency Plan for AIDS Relief (PEPFAR), which is the largest commitment by any nation to address a single disease in history, and of which South Africa is the largest beneficiary.

In South African law, abortions are legal by request under certain conditions, and may be performed in public and private healthcare facilities. No consent is required other than that of the pregnant woman. In the case of a minor, they will be advised to, but not required to, consult their parents or guardians.

Until the 12^th week of pregnancy, no reason needs to be given for the abortion. Until the 20^th week, an abortion is legal if, in the opinion of a medical practitioner, the continued pregnancy would pose a risk of injury to the woman’s physical or mental health; or there exists a substantial risk that the foetus would suffer from a severe physical or mental abnormality; or the pregnancy resulted from rape or incest; or the continued pregnancy would significantly affect the social or economic circumstances of the woman. After 20 weeks, abortion is only permitted if a medical practitioner agrees that continuing the pregnancy would endanger the woman’s life; would result in a severe malformation of the foetus; or would pose a risk of injury to the foetus.

In an entirely predictable turn of events, the Mexico City Policy led not to a decrease in abortions, but to an increase. One of the reasons was that family planning NGOs and other abortion providers also provide contraception, so unwanted pregnancies increased. Many of those pregnancies ended in unsafe back street abortions. Conversely, whenever the policy was rescinded, the number of abortions in Africa decreased.

So, the Mexico City Policy not only restricts US aid funding to deserving African healthcare organisations that act perfectly within the laws of their countries, but it is counter-productive, increasing abortion rates, putting pregnant women at greater risk, and worsening poverty.

It is a stupid, harmful policy, and Trump will almost certainly re-impose it at the behest of his religious fundamentalist base.

America’s enemies

Returning to geopolitics one last time, Trump is not very likely to tolerate South Africa’s hostility towards Israel and friendly relations with Iran and its proxies. On the upside, South Africa might get away with its tacit support of Putin, because Trump is also on the wrong side of that conflict.

Given South Africa’s alignment with many of America’s avowed enemies, it is far more likely to face consequences such as being ejected from AGOA or subjected to aid cuts, disinvestment, or even sanctions with Trump in the White House than with Harris as president.

As much as I oppose the South African government’s foreign policy positions, I do believe that they should remain a matter of sovereign choice, and that South Africa’s businesses and people should not get punished for the geo-political idiocy of their government.

For all these reasons, South Africa will rue an election victory by Donald Trump, and will fare much better under a Kamala Harris administration.

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*Ivo Vegter is a freelance journalist, columnist and speaker who loves debunking myths and misconceptions, and addresses topics from the perspective of individual liberty and free markets.

This article was first published by Daily Friend and is republished with permission

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