Impact of Trump Presidency on Africa

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Policy of Trump-Led Administration Toward Africa Remains Unclear

By Mark Bohlund

THUR, NOVEMBER 17 2016-The policy of a U.S. administration led by President-elect Donald Trump toward Africa remains unclear, creating uncertainty for the economy of Sub Saharan Africa. But U.S. aid to the region is less important than that from the European Union and is unlikely to be a major sticking point for the new administration. The same applies for trade concessions under the African Growth and Opportunity Act. Still, the indirect impact from a radical shift in U.S. economic policy would be challenging for the continent.

Key Points:

  • U.S. Trade With Africa Unlikely to Be Policy Priority for Trump
  • U.S. Tariffs Against China May Hurt Demand for Africa’s Exports
  • Less Aid to Africa From EU Is Greater Threat Than U.S. Cut
  1. U.S. Trade With Africa Unlikely to Be Policy Priority for Trump

The African Growth and Opportunity Act (AGOA), giving duty-free access to the U.S. for a range of exports from Sub-Saharan Africa, is unlikely to be a top priority for the incoming U.S. administration given that its impact on U.S. jobs is minimal. Oil accounts for the majority of shipments under AGOA, which has suffered from increased U.S. shale oil production. In addition, the $4 billion in non-oil shipments to the U.S. under the program equates to less than 1% of Sub-Saharan Africa’s total exports.

Africa Trade Hit by U.S. Shale Output

  1. U.S. Tariffs Against China May Hurt Demand for Africa’s Exports

Sub-Saharan exports to the U.S. have traditionally been dominated by oil and minerals with a higher share of agricultural and manufactured goods going to the EU. In addition, China and India have both emerged as more important export destination than the U.S. in recent years. As such, if the U.S. imposes tariffs on imports from China that could have a bigger impact, through reduced demand for African commodities, than any loss of preferential access to the U.S. market for African countries.

Africa Exports More to China, India Than U.S.

  1. Less Aid to Africa From EU Is Greater Threat Than U.S. Cut

Africa is arguably at greater threat from a reduction in foreign aid from the austerity-plagued EU than a more isolationist incoming U.S. administration led by president-elect Donald Trump. The U.S. is the largest bilateral donor to Africa, giving on average $9.1 billion in Official Development Assistance in 2010-2014, with about 40% of that going to health care. But, the ODA aid from EU countries and institutions combined amounted to $22.7 on average every year in 2010-14, according to OECD statistics.

Bohlund is Africa and Middle East Economist, Bloomberg Intelligence

 

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