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Trump presidency could usher in import tariff hike for SA

Cape Town - A Donald Trump presidency could see an extra 15% import tariff slapped onto South African goods landing in the US, an economist said.

This would break a 100-year agreement on a 20% tariff, raising it to 35% and making South African goods seem too expensive, said University of the Witwatersrand lecturer Tinashe Chuchu of the School of Economic and Business Sciences.

"If it spikes by 15% it would discourage foreign nations from doing business," he said.

This could have a negative effect on South Africa's economy with less income and fewer jobs the likely result.

But Trump's plans to revive sagging US production will not be as easy as simply slapping a higher tariff on imports.

He will have to wean the country off cheap imports from China and developing countries first.

Increased costs

Chuchu said that like many other countries, US companies have become dependent on China and developing countries, where production costs and salaries are much lower, to manufacture their goods.

"Many of his suits are not even made in the US," quipped Chuchu.

Bringing these industries, such as the Detroit automotive sector, back online in the US would mean increased salary and production costs, which not all businesses would be able to afford.

"Even the US Olympic outfits were made in China. Ford, Chrysler - all moved to Mexico from being 'proudly Detroit'."

If these companies were to start producing goods in a country with high wages, salaries and taxes, production would decrease and sales and salaries would drop.

"It would have a devastating effect," he said.

Backlash to globalisation

But it is not all doom and gloom for South Africa. As the country increasingly finds alternative markets for its goods it becomes less dependent on the US. Its reputation for high manufacturing standards should also see it through.

Trade and Industry Minister Rob Davies said Trump's success was borne from the backlash to globalisation.

"He is for Americanisation," said Davies.

The very fact that he won the Republican nomination showed that there are concerns about the impact of technological advances in the world.

Innovations like 3D printing and robotics could eliminate "boring jobs", but there is the matter of people who lose their jobs as a result of this.

"Because the problem that we have got at the moment is the 'winner takes all market'," said Davies.

Davies is also driving a push for greater localisation of manufacturing in South Africa, where around 1.77 million people depend on it for work.


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