With Donald Trump elected as the 47th US president, his policies will probably significantly affect South Africa, particularly regarding international relations and the economy.
While returning to office may bring a more conservative approach than his first term, global uncertainty is expected to persist under his leadership. Known for his decisive and action-oriented style, Trump has emphasised his commitment to “US first”.
In his second and final term, he is anticipated to move swiftly, assembling a strong support (although controversial) team and focusing on delivering his objectives within four years. With complete control over government decision-making structures, he is poised to drive substantial changes through his interventions in processes and projects.
This article aims to evaluate the potential economic, geopolitical, and diplomatic impacts of Donald Trump’s second term as US president on South Africa. Also, it identifies key risks, including trade disruptions and diplomatic pressures, while highlighting opportunities such as increased US focus on Africa as a strategic economic partner.
Substantial tax cuts
Trump’s 2024 campaign promises included substantial tax cuts, especially for manufacturers, curbing inflation through monetary policies, and implementing additional import taxes to boost domestic production.
He also pledged to complete the US-Mexico border wall, reinstate the Muslim travel ban, and initiate what he described as the most extensive deportation programme in history, targeting millions of undocumented immigrants.
Additionally, Trump vowed to take a decisive approach to resolving the conflicts in Ukraine and Gaza while adopting a Middle East policy that strongly favoured Israel and maintained a critical stance on Iran.
South Africa’s alignment with BRICS and its vocal support for Palestine place it at odds with US foreign policy under Trump’s administration. How might these policy initiatives affect South Africa in the coming four years?
Since 5 November 2024 when Trump’s election victory became evident, notable macroeconomic changes have already been observed. Oil prices have remained stable below $73 (R1,320) per barrel, gold prices have dropped by approximately $100, the Wall Street All-Share Index has surged by 2,000 points, and the dollar has slightly strengthened against a basket of currencies.
From a geopolitical perspective, South Africa finds itself in a precarious position. Over the past year, the country has made bold moves and statements that challenge its traditional alignment with Western powers.
At the recent BRICS Summit in Russia, President Cyril Ramaphosa declared Russia a key ally after meeting with President Vladimir Putin, who was issued a warrant of arrest by the International Criminal Court, and despite Russia being punished by sanctions from the US and other Western nations since its first, 2014 invasion of Ukraine.
Heavy US and Western sanctions
Furthermore, under heavy US and Western sanctions, Iran has been included in the expanded BRICS grouping. Iran is deeply involved in the Middle East conflict, supporting groups like Hezbollah in Lebanon, the Houthi rebels in Yemen, and Hamas in Palestine, providing financial and military aid in their struggle against Israel. South Africa has openly sided with Palestine in this conflict, further aligning itself with nations such as Russia, China, and Iran through BRICS and other partnerships.
If the new Trump administration intensifies its confrontations with these nations, South Africa may face increased pressure to choose sides in an increasingly polarised global environment. This could result in significant economic risks and challenges, including potential sanctions, trade disruptions, and reduced access to Western markets and investment.
The US will probably intensify its focus on Africa, including South Africa, as an economic partner, driven by the increasing presence of China and Russia over the past decade. With Elon Musk appointed to the Trump administration to streamline government operations, eliminate excessive regulations, cut wasteful spending, and overhaul federal agencies, the US-South Africa relationship could see new opportunities.
However, achieving an “economic diplomatic” agreement that maintains strong ties with both the Global West and East could be challenging. South Africa may find itself in a sensitive position, balancing its relationship with the US and its key Global South allies, such as China and Russia.
Navigating such a polarised geopolitical landscape could disrupt South Africa’s development objectives and foreign policy strategy, forcing it to make tough diplomatic decisions that might alienate either Western or Eastern blocs.
While South Africa’s non-alignment policy aims to maintain global partnerships without aligning with any one bloc, the increasingly polarised international environment could make this approach difficult to sustain without risking significant diplomatic or economic consequences.
Protectionist policies
In addition, Trump will focus on US economic growth through protectionist policies. Global economic dynamics could change significantly, potentially slowing growth in emerging markets like South Africa.
During his first term, his economic policies created shifts in the global economy, often resulting in uncertainty within commodity markets and influencing global demand and prices.
Given South Africa’s heavy reliance on commodity exports, particularly minerals and metals, such changes could directly affect it. A global economic slowdown driven by heightened US-China trade tensions or other Trump initiatives could reduce commodity demand, weakening South Africa's export revenues.
While there is growing demand for commodities linked to clean energy and infrastructure development, scepticism remains about whether these trends can sustain a true commodity super-cycle comparable to those seen in previous decades.
In the past, South Africa has historically relied on foreign direct investment from the US, particularly in the mining, technology, and manufacturing sectors. In 2022, US foreign direct investment in South Africa exceeded $9-billion, with consistent investments in renewable energy, automotive manufacturing, technology, and agriculture.
South Africa’s abundant natural resources, including critical minerals like platinum and manganese, continue to make mining a key area of US interest.
However, challenges such as electricity shortages, policy uncertainty, and a complex business environment keep investors cautious. Actions by the Trump administration could introduce more significant global economic uncertainty, potentially making emerging markets like South Africa less appealing to investors.
A decline in foreign direct investment could slow growth in vital sectors, affecting job creation and technological progress. Reduced investor confidence might also trigger capital flight, further straining the rand and South Africa’s financial stability.
Higher-risk investment destination
Additionally, if South Africa’s close ties with BRICS and its stance on issues like Palestine are perceived as counter to Western interests, it could be seen as a higher-risk investment destination.
However, increased Chinese investment, particularly in infrastructure and development projects, could offset some of these reductions, providing an alternative source of funding and growth opportunities.
Meanwhile, the rand, one of the most volatile currencies globally, is highly sensitive to shifts in international market trends. During Trump’s previous administration, his policies often strengthened the US dollar, exerting pressure on emerging market currencies, including the rand.
A stronger dollar could lead to a weaker rand, increasing the cost of imports for South Africa, particularly fuel and other essential goods. This, in turn, would probably drive up inflation later in 2025, reducing consumer purchasing power.
The South African Reserve Bank might raise interest rates in 2026 to counter rising inflation, increasing borrowing costs, and potentially slowing economic growth. Trump's potential economic strategies, such as tax cuts, heightened government spending, and deregulation, could contribute further to dollar strength.
On the other hand, a weaker rand might benefit South Africa’s exports, making them more competitive internationally and partially offsetting the adverse effects of currency depreciation.
A key issue is that of the African Growth and Opportunity Act (Agoa), which enables African nations, including South Africa, to export specific goods to the US duty free. South Africa, as the largest US trading partner in Africa, has more than $20-billion in bilateral trade. More than 600 US companies operate in South Africa, with the country benefitting significantly in sectors like agriculture, automotive, and textiles.
In 2022, Agoa-supported exports from South Africa were valued at approximately $2.7-billion, accounting for 25% of its total US-bound exports. By 2023, bilateral trade totalled $17.6-billion, with Agoa exports including automotive parts, citrus, wines, iron, steel, and certain chemicals.
Significant challenges
Under a Trump administration, Agoa could face renegotiation, potentially affecting South African industries that depend on these benefits. Any reduction or cancellation would lead to significant challenges, such as job losses and decreased revenues, requiring South Africa to seek alternative markets or renegotiate terms.
Additionally, its free trade agreement with the European Union (EU) could be strained if South Africa’s alignment with BRICS is seen as counter to European interests. Loss of access to key markets like the US and EU would economically damage South Africa. However, changes to Agoa are unlikely in the short term, providing some stability.
In conclusion, South Africa’s alignment with BRICS and its support for Palestine offer both opportunities and challenges. Balancing strategic autonomy while navigating these relationships will be key.
South Africa may need to continue diversifying its economic partnerships and advocate for a more inclusive global system to safeguard its diplomatic and economic interests amid these pressures. For this reason, increased collaboration with Asian economies, particularly China and India, could offset reduced foreign direct investment from the US and Europe.
The election of Donald Trump could introduce various challenges for South Africa in economic, political, and diplomatic arenas. While his protectionist economic policies may disrupt global markets, South Africa can leverage its strategic position within BRICS and the African Continental Free Trade Area to minimise risks and diversify its economic partnerships.
The impact of his policies will depend on his decisions and how South Africa strategically manages its relationships with the US and other global powers, especially in an environment that may favour protectionism and global competition.
South Africa must emphasise its commitment to neutrality in global conflicts, positioning itself as a mediator rather than a partisan actor. Strengthening ties with alternative trading blocs and diversifying economic partnerships could help South Africa mitigate potential risks while seizing new opportunities. DM