At the beginning of April, President Trump declared a “liberation day” for American business, and announced a wide range of tariffs on virtually every country around the world. This followed the election pledge, if inclusive, if it was moving during Trump's first administration, and if it was so comprehensive, and what he called tariffs “the most beautiful words in the dictionary.”
Trump sees tariffs as an important way to readjust America's chronic trade deficit and force manufacturers to produce American goods and hire workers. “The Day of Liberation” quickly affected financial market sentiment as the president tried to restructure the entire composition of world trade. The VIX index, which measures risk levels and volatility in the stock market, rose by more than 110% in the aftermath of the announcement.
Not only did they consider how they would respond to the tariffs imposed directly on them, but what was particularly concerning African countries was the escalation of trade tensions in US-China. The trade war between Washington, the world's largest economy, and Beijing, the world's second largest economy and the largest trading partner in almost every African country, could have a major impact on the continent's economy and growth outlook.
On “Liberation Day,” Trump imposed an additional 50% tariff on Chinese imports, increasing the total tariff on some goods to more than 100%. China responded by announcing an additional 34% tariff on US goods and imposing export controls on rare earth minerals.
A series of further retaliation and counter-retaliation ultimately resulted in the US imposing a 145% tariff on most Chinese products, while Beijing implemented a slightly lower 125% rate.
In May, both sides agreed that the US would lower tariffs to 30% and China would further negotiate to 10% to eliminate tensions. The volatile nature of this deal includes African leaders and global policymakers.
“They're the ones who are based in Cape Town,” said Daniel Silke, a political and economic analyst based in Africa.
“It's an old cliché, but it remains true. The market doesn't like uncertainty, whether it's the world's major capital or the developing world.”
Influx of cheap Chinese products?
Trade tensions between the US and China are likely to affect the African continent, with its economy and businesses being particularly exposed to developments affecting Beijing.
The decline in trade between the two biggest economies in the world is likely to be astounding. The World Trade Organization (WTO) forecasts an 80% decline in US-China goods trade this year alone. The International Monetary Fund (IMF) has previously warned that sub-Saharan Africa could have the worst impacts of “geoeconomic fragmentation” between the east and west.
Perhaps the most direct potential impact lies in the potential for an increase in Chinese goods exports to Africa in light of declining trade with the US.
Feristas Kandia, a trade and development researcher at Nairobi's Mashariki Research and Policy Centre, told African businesses that “Chinese companies are more likely to rely on the African market as they face restrictions and tightening tariffs from the US.”
“As access to the Western market is more constrained, Africa offers both a strategic alternative and a growing consumer base,” she adds. “China has already established itself as a dominant trade and investment partner across the continent, and current trade tensions could accelerate this shift. This development presents both opportunities and challenges. Meanwhile, an increase in the availability of affordable Chinese products could help reduce business costs,” Kandia said.
“On the other hand, the influx of Chinese goods risks overwhelming Africa's fragile domestic industry. Many local manufacturers are already struggling to compete with low-cost imports.”
China's funding in Africa is low
Furthermore, ongoing trade tensions between the US and China are likely to be reflected in weak growth in Beijing. The IMF revised its forecast for China's growth in 2025 to 4% in light of trade tensions in the economically important real estate sector and China's own domestic challenges.
Global Investment Bank UBS recently revised its growth forecast for China from 3.4% to 3.7% to 4% in light of the apparent détente this month. However, this is still significantly below most “freed date” forecasts. Goldman Sachs is more optimistic that the tariff rollback will boost China's economic activity and consider 2025 growth to around 4.6%.
Kandia said China's slow growth environment would “inevitably spill over Africa,” and suspects that “one of the most pressing effects is likely to be a decline in infrastructure China's funding.”
China's loans to Africa have been declining for several years. It peaked in 2016 with a total loan of $28 billion. The rock bottom growth pandemic era reduced this plunge to less than a billion in 2022.
Beijing has increased its funding commitment on the continent, but in 2023, Chinese lenders won around $4.6 billion in 2023, the more fractured global trading environment and slower growth in China could limit their ability or willingness to expand further loans to Africa.
Kandia said, “As China adapts to internal economic pressures such as high debt levels, demographic changes and the real estate sector, its outward investments are becoming more cautious and strategic. “This shows serious vulnerability for countries that rely heavily on Chinese funds to drive development plans.”
Commodities are gear for slowing down
Kandia also said that China's slow growth would likely reduce the demand for raw materials in Africa. Prices are now rebound, but the “liberation date” wiped out the value of copper futures, for example, by nearly 20%. For example, it could reflect market fears of weak demand from countries that account for almost 30% of the world's total manufacturing output.
“China is a major consumer of products such as copper, iron ore, oil and wood. If industrial production and construction are slowed in China, commodity prices could fall, hurt African exporters, and the growing fiscal obstacles in a resource-dependent economy could be widespread,” Kandia tells African businesses. “This could limit the government's ability to serve debt, invest in social infrastructure, and stimulate domestic industries. A decline in prices means foreign exchange revenues and more stringent fiscal space for governments already struggling with debt.” The rising political and economic tensions between Washington, DC and Beijing could also have geopolitical implications in Africa. Silke is concerned that political fallout will “truly put African countries in a very troublesome position.”
Is it time to choose the side?
“Some people feel they can deal with Washington more comfortably, while others want to get closer to China,” he says.
Silke fears that this could undermine initiatives such as the African Continental Free Trade Area (AFCFTA), which was designed to harmonize trade regulations and promote intra-African trade.
By bringing some African countries closer to China and some closer to the US, Silke says, “this could break the idea of ​​a more unified trade bloc that Africa thinks can and should probably become.”
Kandia is optimistic that Africa can balance its involvement with both sides and avoid being drawn into these political tensions, but says that “African countries may face increasing pressure to choose their dimensions, whether directly or indirectly.”
“Africa requires the success of China's capital and the US innovation, the eastern infrastructure and the western market,” Kandia tells African businesses. “Choosing one narrows the development options for the continent at a time when broader partnerships are needed to achieve industrial and social goals. Africa should set up a principled, unorganized position.”
It remains to be seen how far the trade war between the US and China will go, or whether the most dramatic movements have already been made in recent climbs from both sides.
However, Kandia emphasizes that Africa needs to “respond to these economic and geopolitical risks” by strategically engaging with alternative partners such as Japan, the European Union and Gulf countries, mitigating the continent from external shocks and supporting the re-accumulation of global trade relations.
“Both governments and businesses must embrace scenario planning and strategic forecasts,” she says. “The global landscape is becoming increasingly unstable, and those who anticipate change and adapt early will be better positioned to thrive.
“Through early warning systems, public-private dialogue, or long-term industrial policy, the goal is to move from reactive to predictive thinking.”
