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AMERICA'S CHOICE, SOUTH AFRICA'S FUTURE: THE IMPACT OF THE US ELECTIONS ON SA
Issued by Ismail Joosub on behalf of the FW de Klerk Foundation on 31/10/2024
Introduction
As the world prepares for the 2024 US presidential election, the outcome is not just a matter of interest to American voters. It will reverberate across the globe, affecting economies, international relations and trade policies, including in countries like South Africa. Given the significant role the United States plays in global economic governance, the foreign policy direction of the next administration—whether led by Kamala Harris or Donald Trump—will have a direct impact on South Africa’s economic prospects, geopolitical positioning and international trade relations. This article seeks to explore the potential consequences of the upcoming US election on South Africa, examining key areas such as trade, foreign policy, energy, technology and investment and offering insights into how these factors could shape South Africa’s future.
Economic Policy: Taxes and Trade
At the heart of both Trump’s and Harris’s economic policy platforms are tax reforms and trade agreements that will have varying implications for South Africa. Kamala Harris, the Democratic frontrunner, is pushing for higher corporate taxes and regulatory reforms aimed at reshaping the financial and tech sectors. This could result in reduced profitability for US corporations, which in turn may have downstream effects on global markets, including South Africa’s. Higher corporate taxes could potentially lower US firms’ appetite for international investment, directly impacting South African businesses that rely on foreign capital inflows, mergers and acquisitions.
In contrast, Donald Trump’s tax agenda remains focused on deep cuts, particularly for domestic manufacturers, with the goal of boosting US industry. Trump’s policies could, in theory, encourage American firms to repatriate profits, providing them with greater liquidity to engage in cross-border acquisitions, which could present opportunities for South African firms. However, his protectionist “America First” rhetoric suggests that South Africa’s access to the US market could be limited by new trade barriers, complicating the country’s export strategy. For South African firms reliant on American imports, this could mean higher costs and disrupted supply chains due to higher tariffs or renegotiated trade terms.
The Shift from Aid to Trade: The Future of US-South Africa Relations
Historically, US policy toward Africa has been shaped by foreign aid, but both Harris and Trump appear poised to shift focus from aid to trade. This mirrors a broader global trend in US policy that seeks to empower African economies through investment and trade partnerships rather than purely humanitarian assistance. While this shift may help African countries grow more sustainably, South Africa will need to adjust its diplomatic strategy to position itself as a trade partner of choice.
Under a Harris presidency, there could be a continuation of President Biden’s Africa strategy, with an emphasis on green energy initiatives, digital infrastructure and trade partnerships. This may align with South Africa’s own renewable energy goals and its burgeoning tech ecosystem. The Harris camp has shown interest in deepening ties with African nations as part of a broader effort to counter the influence of China and Russia. In particular, the Biden-Harris administration’s Inflation Reduction Act (“IRA”) has incentivised renewable energy investments, which could unlock opportunities for South African companies in the clean energy space.
Trump, on the other hand, is likely to revert to his earlier “America First” policies, which could include renegotiating existing trade agreements in ways that may be less favourable for South Africa. His previous term was marked by heightened tariffs, particularly in dealings with China, which had ripple effects on the global economy. Trump’s return could also see the US reduce its developmental assistance programmes and shift away from multilateral engagements with African countries. This would leave South Africa facing an uphill battle to secure favourable trade terms in a more transactional, bilateral-focused environment.
Energy Policy: A Tale of Two Paths
One of the starkest contrasts between Harris and Trump is their respective energy policies, which will have profound implications for South Africa’s own energy trajectory. A Harris administration would likely continue Biden’s green energy revolution, with a focus on transitioning to renewable energy sources. This could create opportunities for South African firms operating in the renewable energy sector to secure US investment and technical expertise, potentially accelerating South Africa’s own energy transition. Additionally, South Africa’s mining sector, especially its production of critical minerals, such as cobalt and lithium, could benefit from US investments driven by the need to secure supply chains for clean energy technologies.
In contrast, Trump’s pro-fossil fuel stance would likely result in a resurgence of US oil and gas production, which could temporarily stabilise global energy markets. However, this would undermine global efforts to curb carbon emissions and could have long-term consequences for climate resilience, particularly in developing nations like South Africa. Trump’s preference for traditional energy sources would likely stall the momentum toward renewable energy collaboration, narrowing opportunities for South African firms in green sectors.
Technology and Big Tech Regulation
Both Harris and Trump are likely to continue scrutinising US tech giants, but their approaches differ in important ways that could impact South Africa’s burgeoning digital economy. Harris would likely push for regulatory reforms aimed at curbing the dominance of companies like Facebook, Google and Amazon, emphasising issues like data privacy, anti-competitive practices and misinformation. This could lead to greater global scrutiny of tech monopolies, indirectly benefiting South African tech startups by levelling the playing field. However, tighter regulations on US firms could also restrict the flow of venture capital into Africa’s tech ecosystem, which currently benefits from the global expansion of US tech giants.
Trump’s approach would lean more toward deregulation, which could result in fewer restrictions on US tech firms and potentially more investments flowing into markets like South Africa. However, this deregulation could exacerbate global inequalities in digital infrastructure, as large US firms consolidate their influence in emerging markets. South Africa’s tech sector could find itself squeezed by both competition from US giants and a lack of regulatory support to protect local startups.
Geopolitical Considerations: Africa as a Battleground for Influence
Both Harris and Trump acknowledge the strategic importance of Africa in the broader context of global power struggles, particularly between the US, China and Russia. However, neither candidate has made Africa a focal point of their campaign, with US-Africa relations largely taking a backseat to domestic issues. Under Harris, South Africa could see a continuation of Biden’s efforts to build stronger diplomatic ties with African nations as part of a strategy to counter Chinese and Russian influence. This would likely manifest in greater US participation in multilateral forums such as the African Union and increased investments in African infrastructure projects.
Trump’s approach, by contrast, is expected to be more isolationist, focusing on bilateral deals and reducing US involvement in international development programmes. This could result in a reduction of US aid to Africa, placing South Africa in a difficult position as it seeks to maintain its leadership role on the continent, while navigating a more fragmented global order. Trump’s preference for deal-making over diplomacy could also lead to erratic shifts in US foreign policy, complicating South Africa’s efforts to build stable, long-term trade and investment partnerships.
Conclusion
As South Africa braces for the outcome of the 2024 US presidential election, it is clear that the stakes are high. Whether it is Kamala Harris or Donald Trump who takes the helm, South Africa will need to navigate a complex set of challenges and opportunities. From shifting trade policies and evolving energy strategies to the potential for greater geopolitical competition, the next US administration will shape the contours of South Africa’s economic future and its place in the global order. The establishment of the Government of National Unity reflects our country’s recognition of the need for collaborative governance in a rapidly evolving global context. This multi-party approach aims to ensure broad-based consensus on key national priorities, including international trade and economic diplomacy. By embracing the diverse perspectives within the GNU, South Africa is better positioned to navigate external economic pressures, strengthen its trade partnerships and leverage its strategic position within global value chains.