Economists suggest GNU cooperation as the globe recovers from week of financial chaos
South Africa has not been spared the impact of United States (US) President Donald Trump’s trade war following the announcement of universal levies on all goods that the US imports.
Ministers and deputy ministers of the Government of National Unity pose after being sworn in at the CTICC in Cape Town on 3 July 2024. Picture: @GovernmentZA/X
JOHANNESBURG - Economic analysts have called on the Government of National Unity (GNU) to get its house in order quickly as the world tries to rebound from a week of financial chaos.
South Africa has not been spared the impact of United States (US) President Donald Trump’s trade war following the announcement of universal levies on all goods that the US imports.
All US trade partners were slapped with a 10% baseline tariff, with the possibility of higher charges on imports after a 90-day review.
While some countries decided to hold off on retaliating against the US tariffs, China is among those who have launched a full-scale pushback against Washington.
After the US increased its tariffs on Chinese imports to 104%, the Chinese finance ministry has since escalated the trade war and raised its levies on US goods to a ceiling of 125% from 84%.
READ: Trump admits trade war 'cost' as markets hit
In all of the back-and-forth, the global responses saw South Africa taking a beating with at least R1 trillion in value wiped off.
Investment strategist at Investec Osagyefo Mazwai said political differences must be resolved to avoid further currency weakness.
“If we do increase political stability and policy certainty that should have a positive result on the currency and that has a wide range of consequences for things like inflation, the South African Reserve Bank's flexibility in terms of cutting interest rates and providing impetus for consumer spending in South Africa.”
While the African National Congress (ANC) is in talks with parties in a rush to reset the GNU, there are now concerns about what a fallout between the ANC and Democratic Alliance (DA) would mean for government in KwaZulu-Natal where the two parties are in a coalition with the Inkatha Freedom Party (IFP) and National Freedom Party (NFP).