Trump presidency 2.0: How SA businesses will feel the effects

"When America sneezes, the whole world catches a cold." This adage has been proven true time and time again and all eyes are on Washington as President-elect Donald Trump is set to return to the Oval Office in mere days. 3Cube Property Solutions examines the global impact that a second Trump presidency is likely to have and how South African enterprises may be affected.

Changes to the global economy

A first pertinent point, raised by economic development specialist Professor Daniel Meyer, is that South Africa's vocal support for Palestine positions us at odds with US foreign policy under Trump's administration. Meyer, as published in the Daily Maverick, also points out that South Africa is in a precarious position from a geopolitical perspective. Various recent moves have seen South Africa step away from its historical alignment with Western powers.

History tends to repeat itself and Trump's first term was characterised by economic policies that led to changes in the global economy. If this were to recur, it would have a significant impact on South Africa as a result of our reliance on mineral and metal exports. Factors such as growing US-China trade tensions could lower the global demand for these commodities.

With or without Trump, there is a myriad of factors that give investors caution when it comes to South Africa. From electricity shortages and the country's greylisted status to ongoing policy uncertainty, there are various red flags. Amid the global economic uncertainty likely to be brought about by Trump's return, these factors will become more significant.

Trump's potential economic impact on South Africa

Stellenbosch Business School has published an article in which Professor Andre Roux, a highly regarded economist, shares his thoughts on Trump's re-election and its impact on our shores. Roux points out that Trump's "America first" policy will likely lead to increased import tariffs. Further impact could come if Trump chooses to reshape the African Growth and Opportunity Act, which supports and governs trade with African nations.

Another challenge that Roux shines a spotlight on is the already complex relations between Washington and Beijing. If existing trade tensions become more pronounced, African economies that rely on Chinese investments are likely to feel the pinch.

Climate change

Roux also points out that Trump's scepticism about climate change could lead to lasting impacts in Africa. In his words, "reduced USA engagement in global climate initiatives could hinder progress on climate resilience efforts across the [African] continent." On the campaign trail, Trump had made promises to "end the war on coal and the war on miners". He has also pledged to cut all federal spending on renewables research. However, a politician's promise is not always to be relied upon, and it remains to be seen whether he will follow through on his words.

The good news for South Africa

On the positive side, Trump's re-election does not change the outlook for Reserve Bank rate cuts - at least in the short term. A further rate cut (which will be the third consecutive one in recent months) is still predicted to emerge from the Monetary Policy Committee's next meeting. Trump's presidency creates a challenging macroeconomic environment. However, as Old Mutual Wealth's chief investment strategist, Izak Odendaal, recently pointed out in an article penned for Businesstech it also creates the impetus for us to become more reliant on internal growth drivers rather than on the global environment.

Trump's return to the White House creates a challenging set of circumstances for South African policymakers and businesses to navigate. The first step in creating long-term stability for any business is having the right premises. If your business needs commercial, industrial or retail real estate in Gauteng or the Western Cape, get in touch with 3Cube Property Solutions today.