Trump's Return: the trade wars facing Africa

As Donald Trump prepares to re-enter the White House next week, his MAGA approach to foreign policy threatens to destabilise Africa’s trade markets.

With its exports dominated by primary commodities and agriculture products, Africa is vulnerable to external shocks, of which the Trump presidency will be a prime example.

Yet ironically Trumps impact on Africa’s traditional global partners could force what the continent arguably most needs – which is the development of continental industries and pan-African trade.  

Currently, the continent has weak ties in global value chains and is heavily dependent on commodity market exchanges. Its growth in the coming decade will be heavily based on the progress it can make on greater Trade in Value Added (TiVA). In our previous discussion, we highlighted how a Trump presidency could shift Africa’s economic and political ties with the U.S. and other global powers. This article takes a deeper dive into the impact of Trump’s presidency on Africa’s trade landscape, exploring its current trade structure, and analysing the ripple effects across African industries and agreements.

Africa’s Vulnerability to External Shocks

Africa’s trade dynamics are defined by structural challenges and dependencies that expose the continent to external shocks. The continent consistently imports more than it exports. Manufactured goods and refined fuels dominate its imports, while 60% of its exports are primary commodities such as petroleum, ores and metals. Its reliance on raw materials, leaves Africa vulnerable to global price volatility including disruptions in global trade policies. This has been most recently and dramatically evidenced in the knock-on effects on Africa of Covid-19 and the Ukrainian-Russian war.

The European Union (EU) is Africa’s largest trade partner, accounting for 10% of exports in 2023, including raw materials and agricultural products. China follows, with 6% of exports, driven primarily by raw materials like cobalt and manganese. The United States, although smaller in comparison, accounts for 2% of exports, focusing on petroleum, textiles, and agricultural goods. On the import side, the EU and China remain dominant, supplying Africa with machinery, vehicles, electronics, and processed foods.

Africa's top trade partners: data from most recent submissions to UN Comtrade.

Intra-African trade is emerging, representing 18% of exports and 15% of imports. This trade tends to include a higher share of manufactured goods and agricultural products, showcasing the potential for regional value chain development under the African Continental Free Trade Area (AfCFTA) (How Africa Trades, LSE).  One positive, and from the Trump perspective, probably unintended consequence of the new presidency is the increased emphasis on the development of African industry and intra-continental trade.

Trump’s Channels of Impact on Africa

Countries specialise in producing goods where they have a cost advantage. Africa’s comparative advantage lies in its natural resources, and the exploitation of these is both a driver and side-effect of its lagging industrial development. This is where the impact of Trump’s trade policies will be most keenly felt.

One of the most immediate and direct impacts will be seen in changes in demand for exports and imports These will be driven in great part by tariffs, trade preferences, and global economic conditions. Price changes, particularly for volatile commodities, will affect Africa’s trade balance and fiscal stability. Non-tariff barriers, such as regulatory requirements, can further restrict market access for African goods. Finally, shifts in the terms of trade—export prices relative to import prices—can have far-reaching implications for national incomes and economic growth.

These impacts can be analysed through three key lenses: first, the dynamics with trade partners; second, the ripple effects on specific industries; and third, the broader changes in multilateral agreements that shape Africa’s engagement in the global economy.

Trade Partners in Turmoil: Africa’s balancing act

Trump’s presidency is already reshaping Africa’s relationships with its major trade partners, as America’s traditional allies – including Canada and Europe – respond to the new global realities.  

Africa, never a priority for Trump, will not be spared in the process. The United States, under Trump’s leadership, may reduce its commitment to the African Growth and Opportunity Act (AGOA), a critical programme that provides duty-free market access for African products. Modifying or terminating AGOA could severely affect export-dependent sectors like textiles, apparel, and agriculture, especially in countries such as Kenya, Ethiopia, and Ghana. Additionally, Trump’s proposed universal tariffs, including a 10% baseline duty on imports, would make African goods less competitive in the U.S. market.

The largest impact will be felt from rising tensions between China and the U.S. and an impending trade war. Escalating U.S.-China tensions may disrupt Africa’s commodity exports to China, particularly raw materials like cobalt, manganese, and oil, which are vital to China's industrial and technological sectors. A reduction in Chinese demand for these resources could severely impact African economies that rely heavily on these exports for revenue and foreign exchange.

Additionally, the geopolitical rivalry could intensify African nations' balancing act, navigating between the two powers. Countries with close ties to China through initiatives like the Belt and Road Initiative may face U.S. scrutiny, potentially impacting their access to American markets, trade preferences, and even development aid. This strategic tug-of-war could create diplomatic challenges and strain African nations' ability to pursue independent trade and development policies.

If China reallocates resources to counter U.S. pressures, Africa could see reduced infrastructure investment, a cornerstone of its development strategy. Key projects, including ports, railways, and power plants, may face delays or cancellations, slowing economic growth and regional integration efforts. Moreover, reduced Chinese financing for industrialisation and technological upgrades could undermine Africa's efforts to move up the value chain, leaving economies more reliant on primary commodity exports and vulnerable to price fluctuations.

In a broader sense, rising U.S.-China tensions could also disrupt global supply chains, leading to increased uncertainty and price volatility in global markets. This would exacerbate the challenges faced by African economies, particularly those that are already grappling with debt burdens, inflation, and low levels of economic diversification. African leaders will need to adopt agile strategies to mitigate these risks, fostering stronger intra-African trade and exploring new partnerships to reduce dependency on any single global power.

The European Union, Africa’s largest trade partner, would also be affected indirectly by Trumpian destabilisation of global markets influencing EU-Africa trade flows. Moreover, the EU’s green trade policies, such as the Carbon Border Adjustment Mechanism, could pressure African exporters to adopt costly sustainability measures. While this aligns with long-term environmental goals, it could strain short-term trade relations if they contradict the US’ trade objectives in the continent.

Variations in Exposed Industries and Market Volatility

The impact of Trump’s policies will be felt unevenly across Africa’s industries, amplifying vulnerabilities in some sectors while leaving others relatively unscathed. Raw material exporters, such as oil producers in Nigeria and Angola, may find short-term gains under Trump’s pro-fossil fuel agenda. However, the benefits could be offset by volatility in global demand and price fluctuations, which remain a persistent risk. Agricultural exports, already hampered by stringent U.S. sanitary standards, are likely to face additional hurdles if new trade barriers are introduced, further constraining market access for African farmers.

Africa's top commodity imports and exports: data is from the most recent submissions to UN Comtrade.

In contrast, Africa’s burgeoning e-commerce sector, fuelled by platforms like Alibaba, may remain relatively shielded from Trump’s focus on traditional industries. This digital trade growth underscores the potential for diversification in Africa’s economic landscape.

The manufacturing sector, however, faces significant challenges. The potential erosion of AGOA benefits threatens the competitiveness of Africa’s textile and apparel industries, jeopardising jobs and discouraging investment in export-driven manufacturing. Yet, amidst these challenges lies an opportunity: by strengthening regional value chains through the African Continental Free Trade Area (AfCFTA), the continent can reduce its reliance on external markets, drive industrialisation, and build resilience in the face of shifting global trade dynamics.

Unravelling Multilateralism

Trump’s skepticism of multilateral institutions, particularly the World Trade Organisation (WTO), poses a significant threat to the stability of global trade rules. As a region heavily reliant on these frameworks to secure preferential terms and protect its developmental interests, Africa stands to lose considerably if multilateralism is deprioritised.

The WTO’s special and differential treatment provisions, which offer developing nations greater flexibility in trade, could come under strain if Trump shifts focus to bilateral deals, where African countries may face unequal negotiating power. Such a pivot could erode Africa’s ability to influence global trade norms, further marginalising the continent in the international economic system. For Africa, this underscores the urgent need to strengthen regional integration through mechanisms like AfCFTA and to advocate for the preservation of multilateral trade structures that safeguard its economic interests.

Making African Trade Great

The same pressures that threaten African trade also hold out the opportunity for the continent to break free from its dependency on global markets for primary products. To navigate the challenges posed by Trump’s trade policies, Africa will need to strengthen nascent regional trade through AfCFTA to reduce dependency on external markets and foster industrial growth. Diversifying trade partners beyond the U.S., EU, and China can also enhance resilience, while investments in sustainability, infrastructure, and compliance with global standards will improve Africa’s competitiveness in international markets.

At the same time, strategic engagement with the U.S. will remain essential. Advocating for the extension of AGOA and negotiating bilateral agreements that align with Africa’s development goals will be critical. Pushing for WTO reforms that address the unique needs of developing countries can ensure fairer trade opportunities. However, the success of these strategies hinges on Africa’s ability to resolve internal conflicts and strengthen governance to enable sustainable economic growth.

In the next blog, we’ll shift focus to American overseas aid and its role in Africa’s development. We’ll explore Trump’s likely impact on essential programmes such as health care, education, and food security and whether his presidency will result in a sharper focus on the transformational benefits of aid - or simply mean drastic cuts.