Donald Trump’s victory in the American presidential election could lead to a more turbulent period in international trade for agricultural products.
International political tension and restrictive trade policies already pose a significant risk to global agriculture. Trump’s intention to impose trade restrictions against certain countries could lead to even greater fragmentation in agricultural trade.
According to Wandile Sihlobo, chief economist of Agbiz, Trump’s campaign promises included imposing up to 20% tariffs on imports – and 60% on goods from China. China has yet to respond to these threats.
When Trump imposed tariffs against China in 2018, American soybean, corn, and pig farmers were hit hardest because China responded by switching to Brazil and Argentina as suppliers. This could happen again, and the impact will be felt worldwide, especially if American farmers pivot to other export markets.
Sihlobo says South Africa is a minor participant in the international market and has no participation in American grain and oilseed markets. However, there is a risk for South Africa if American producers start directing their exports to South Africa’s traditional markets in the Far East. “This must be watched closely as it could lead to greater competition and downward price pressure.
“However, we still believe there will be little direct influence on South Africa. We’ll have to wait and see if other tariffs come that directly affect South African agriculture, but currently, the risk is small.”
According to Sihlobo, the worldwide fragmentation strengthens the view that South Africa must expand its export markets.
“In a divided world like today, an export-oriented industry must spend more time and resources finding new markets and diversifying risks. The success of South Africa’s growth in agriculture depends on having the largest possible number of export markets. Besides maintaining existing markets, new markets must be created in, among others, in the BRICS grouping.”
International trade tension worsened in 2018 due to America’s tariffs against China, especially after China retaliated with import tariffs on agricultural products. Russia’s invasion of Ukraine in 2022 exacerbated the trade disruption, and recent tension in the Middle East is causing further division.
This creates an environment where more and more countries only look after their trade interests and focus on countries with which they have good relationships.
Regarding agricultural trade, Sihlobo believes China cannot be ignored. In 2023, China was the world’s largest importer (11%) of agricultural products, spending just over $200 billion annually. After Brazil, America was the second-largest supplier. At the same time, China was the fifth-largest exporter of agricultural products.