Op-eds

The Trump threat — how worried should South Africa be?

20 Jan 2025

The cracks in US-South Africa bilateral ties are more than apparent, but not all is gloom and doom.

As the world braces for Donald Trump’s return, uncertainty looms over the future of the international geopolitical landscape. While Africa has historically been a peripheral focus for the US, South Africa has increasingly drawn Washington’s ire for its perceived antagonistic foreign policy positions.

Pretoria’s ties with Moscow, Beijing and Tehran, combined with its legal challenge against Israel at the International Court of Justice, present serious diplomatic flashpoints.

Policymakers and investors in Pretoria and Washington must carefully consider the major fault lines in their bilateral relationship over the coming years. Two pressing questions are: what has changed since Trump’s first term, and what does this mean for relations with South Africa?

The global and US economies are more volatile than during Trump’s initial presidency. In 2017, he inherited favourable economic conditions marked by low inflation, accommodative monetary policy and strong consumer confidence.

Those conditions have evaporated. The US federal debt has ballooned to more than $33-trillion from $19-trillion in 2016, driven by pandemic-era spending, infrastructure investments and chronic deficits. Higher interest rates compound these pressures, eroding fiscal stability.

Emerging markets such as South Africa are especially vulnerable to the dual threats of reflation and redollarisation.

Inflation – subdued during Trump’s first term – persists despite aggressive Federal Reserve rate hikes. Trump’s penchant for tax cuts and fiscal expansion could worsen deficits, undermining investor confidence in US economic stewardship. Geopolitical instability exacerbated by wars in Ukraine and the Middle East has disrupted energy markets and heightened global divisions.

Financial markets may be underestimating the economic consequences of Trump’s return. His first term featured a mix of policies marked by deregulation and tax cuts, followed by destabilising trade wars. Trump’s second term could see a swift return to protectionism, including tariff escalations that suppress growth, stoke inflation and destabilise global supply chains.

Investors expecting a dovish Federal Reserve could instead encounter sustained monetary tightening, as Trump’s populist policies keep inflationary pressures high. Initial optimism around deregulation and tax relief may quickly be overshadowed by the broader economic fallout.

Emerging markets such as South Africa are especially vulnerable to the dual threats of reflation and redollarisation. Trump’s protectionist agenda and potential geopolitical flare-ups could reignite inflationary pressures or disrupt commodity prices, driving investors back to the US dollar. This would reverse prior rate cut benefits and weaken currencies across emerging markets.

The global geopolitical environment has also shifted. The liberal world order, while battered during Trump’s first term, remained largely intact, buoyed by leaders like Angela Merkel and Emmanuel Macron. Today, this liberal consensus is fractured. Illiberalism and far-right movements are surging, while multilateral institutions struggle with flagging credibility. Trump’s populist and ideologically fluid agenda is likely to resonate more in this context and threaten traditional alliances.

Washington uses Agoa as a political tool rather than an economic one, whereas the opposite is true for South Africa. This discrepancy suggests a deal can be done.

Closer to home, US-South Africa interactions have frayed since Trump’s first administration. The introduction of a 2024 bill calling for a review of relations underscored the extent of this souring bilateral relationship. With Republicans dominating both Houses of Congress, the question is whether such legislation will now be passed. There is considerable political appetite in Washington for punitive measures to be adopted against South Africa.

And there is perhaps no greater form of leverage that Washington wields over Pretoria than South Africa’s continued inclusion as a beneficiary of the African Growth and Opportunity Act (Agoa). Set to expire in September 2025, Agoa provides preferential access to the US market for various goods, supporting thousands of jobs and generating critical foreign revenue.

While South Africa will need some fancy footwork to avoid exclusion, Agoa could be the perfect catalyst for a recalibration in relations between the two countries. Several factors support this constructive yet contrarian outlook.

First, Washington uses Agoa as a political tool rather than an economic one, whereas the opposite is true for South Africa. This discrepancy suggests a deal can be done, especially given Trump’s dealmaker instincts.

If anything, an approach that uses more stick than carrot could draw South Africa closer to the US and force it to moderate its positions on, for example, Israel and Russia. Pretoria was given a long leash by the Obama and Biden administrations – there will be less leniency under Trump.

However, Washington must also tread carefully; overplaying its hand risks alienating Pretoria and driving it further into the orbit of rivals like Moscow and Beijing.

For South Africa, the market and reputational risks of Agoa exclusion are substantial. The country must use its status as a gateway to Africa, its critical mineral resources, and its democratic credentials to position itself as indispensable to US interests.

Second, South Africa’s government of national unity (GNU) offers an opportunity to reset relations by creating daylight between what it represents versus the policies of the previous ANC administration.

Appointing pragmatic figures like Ronald Lamola, Parks Tau and experienced diplomat Ebrahim Rasool signal a more conciliatory approach. And with South Africa hosting the 2025 G20 summit and the US hosting it in 2026, President Cyril Ramaphosa has an opportunity to build a personal rapport with Trump – which may prove pivotal over the coming years.

Engaging the incoming Trump administration on grand ideas like the need to reform the global multilateral order will simply be a wasted opportunity.

Although many aspects of US foreign policy towards South Africa are beyond Pretoria’s influence, several steps could ensure cooperation on shared priorities.

South Africa must quickly understand what will replace Biden’s “21st Century US-African Partnership”. Under a more transactional “America First” approach, Pretoria needs to tailor appropriate foreign policies that more directly situate its own material interests with Washington.

This may prove challenging as Pretoria has long struggled to clearly define and pursue its national interests in isolation from the shared interests of African or Global South countries. And despite the GNU, foreign policy remains largely unchanged and dominated by the ANC’s ideological international relations outlook, grounded in an outdated commitment to progressive internationalism.

More direct and flexible foreign policy is needed with the US, with tangible material interests stated upfront. Engaging the incoming Trump administration on grand ideas like the need to reform the global multilateral order will simply be a wasted opportunity.

What is likely to resonate is deeper cooperation on creating a more enabling environment for private investment and developing a more robust export-led South African economy.

How to pursue the former with other international partners while pursuing the latter with Washington, will test the mettle of South Africa’s foreign policy establishment over the next four years, and should be confronted head-on. DM

Ronak Gopaldas, Institute for Security Studies (ISS) Consultant and Signal Risk Director, and Priyal Singh, Senior Researcher, Africa in the World, ISS Pretoria.

First published by ISS Today.

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