The rising tide of global protectionism, marked by significant tariff hikes in the United States, is set to reshape Africa’s trade landscape, according to Dr. Mahamudu Bawumia, Ghana’s former Vice President.
Speaking at the International Democrat Union (IDU) Forum, Dr. Bawumia highlighted the far-reaching implications of the US tariff increases, which have pushed the average tariff rate from 2.4% to 10%.
While Africa’s overall trade exposure to the US is relatively limited, with 6.5% of exports and 4.4% of imports, Dr. Bawumia cautioned that specific countries on the continent are highly vulnerable.
Lesotho, for instance, sends nearly 50% of its exports, primarily textiles, to the US under the African Growth and Opportunity Act (AGOA).
The new tariff regime poses a significant threat to these benefits, with Dr. Bawumia warning that “AGOA is essentially going to collapse under these tariffs.”
In response to these changes, Dr. Bawumia predicts a paradigm shift in Africa’s trade strategy, with countries increasingly focusing on self-reliance and strengthening regional trade ties.
“What you’re going to see in Africa… is more clamour for self-reliance. And you’re going to see more political space being created for intra-African trade as a way of dealing with this,” he stated.
This shift towards intra-African trade and self-reliance could have profound implications for the continent’s economic future. By reducing dependence on external markets and fostering stronger regional cooperation, African countries may be able to mitigate the impact of global protectionism and unlock new opportunities for growth and development.
As Dr. Bawumia noted, “The impact of this will not be insignificant,” underscoring the need for African countries to adapt and innovate in the face of changing global trade dynamics.