US President Donald Trump’s administration presents a risk of instability in global trade markets, and even if he does not make good on any of his tariff threats against other nations, the unpredictability of his rhetoric could weaken global trade arbitration systems.
This is according to the head of tactical intelligence at Control Risk, Seamus Duggan, who spoke to TimesLIVE Premium on the sidelines of the Investing in African Mining Indaba in Cape Town on Wednesday.
On Monday Trump threatened to withhold funding for the US President’s Emergency Plan for Aids Relief (Pepfar), which funds 17% of South Africa’s HIV/Aids programmes.
He claimed the South African state was confiscating land after President Cyril Ramaphosa signed the Expropriation Act into law.
Asked about the role that Trump’s threat of tariffs played in disrupting global trade markets, Duggan said the US president could be using tariffs as a negotiating tool through brinkmanship.
“It could be classic brinkmanship. So if you look at what he said to Canada and Mexico, he introduced tariffs quickly, and they were pretty significant, then he backed down. So now we’ve seen the statements from Ramaphosa and others. Ramaphosa has spoken to Elon Musk, who may be able to influence Trump’s thinking on these matters.”
Trump also threatened to impose tariffs on Mexico and Canada, but this was stalled after Canadian Prime Minister Justin Trudeau announced retaliatory tariffs on American goods.
Duggan said Trump’s first administration between 2016 and 2020 also included threats of sanctions against South Africa, but the billionaire president did not follow through on those threats. He said this should not be construed as a sign that he is bluffing about tariffs.
“If you remember Trump’s first administration ... he asked [the state] to take a very deep, close look at claims around land expropriation in South Africa and that didn’t really amount to anything. So maybe we go in the same direction. He does feel a little bit more aggressive this time though, but it strikes me as brinkmanship.”
Trump's use of tariffs on America's trading partners would likely worsen any fragmentation in global bilateral and multilateral trade arbitration systems and institutions.
“Tariffs make things very real for everyone. If you look at the international arbitration regime or framework, that’s one of the immediate places where we see a lot of anxiety.”
Minerals Council CEO Mzila Mthenjane said the mining sector was especially vulnerable to instability in global trade markets caused by protectionist policies. Because of this, he said, the government and the industry would need to collaborate to find ways of navigating these uncertainties effectively.
“On the issue of geopolitics, it’s the reality of the day and when I reflect on it ... mining is in the belly of that beast. We cannot avoid that. So we just need to learn to navigate this environment that is evolving. And I think it’s something that is going to require the government and private sector to work together in terms of how we manoeuvre in this landscape.”
On the opening day of the Mining Indaba, mineral and petroleum resources minister Gwede Mantashe said African economies should unite to withhold minerals from the American economy if Trump sought to withhold Pepfar funding from South Africa.
Ramaphosa said in a statement that he was engaging with the American federal government about Trump’s concerns and remained committed to resolving relations with the US amicably.
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