DAVID BUCKHAM: Trump, palace politics and the Brics currency threat

What a stunning volte-face. What a phoenix-like surge from the ashes of despair. To have had an election stolen from one’s hands in 2020, ripped from one’s rightful grasp by scornful, thieving Democrats, was inconceivable. To be accused of paying off a porn star, of stealing some meaningless documents, of evading tax, of election interference, even of inciting a coup, was detestable. 

The swathes of illegal immigrants and spectre of liberal wokeness overcoming America notwithstanding, Donald Trump’s concerns are also global. On November 25 he posted that on his first day in office in January he would impose a 25% tariff on all imports from Canada and Mexico, and an extra 10% on Chinese imports. This was punishment, he said, for China continuing to produce the active ingredients of fentanyl, the drug at the heart of the opioid epidemic that is the scourge of America. In 2022 there were more than 73,000 deaths from fentanyl overdoses alone.

This is where Trump’s international and global trade policies emanate — from Middle America’s pain. But within a day or two, if not hours, a raft of renowned economists had hurriedly made a range of valid points, with graphs and data and logical thinking, including that there would be a dire consequences for imposing such swingeing tariffs on international trade — trade wars, unintended fallout for US supply chains, and even a return to raging inflation and an escalation of tensions with China.

From an outsider’s perspective it was amusing to see just how effective Trump’s rhetoric can be. Canadian Prime Minister Justin Trudeau anxiously jumped on a plane last Friday to dine with Trump at his Mar-a-Lago resort in Florida, and European Central Bank president Christine Lagarde gave a lengthy interview in which she appealed to Europeans to negotiate rather than retaliate by refusing to buy American products if Europe was also targeted by Trump. 

From 13,000km away, sitting in Johannesburg or Cape Town, it can all seem a bit irrelevant and even comical. President Joe Biden has just taken advantage of his last few weeks of executive powers to pardon his troublesome son, Hunter, who was convicted on gun and tax charges; a clear display of Democratic hypocrisy. The question remained: does the gauche palace drama that is unfolding in the US — sometimes cringingly uncomfortable to watch, like when my children make me watch Modern Family — make any real difference to us here in SA?

Then on Saturday Trump shifted his trade tariff narrative on his Truth Social platform from Mexico, Canada and China to Brics countries, posting that “the idea that the Brics countries are trying to move away from the dollar while we stand by and watch is OVER”.

He went on to say that “we require a commitment from these countries that they will neither create a new Brics currency, nor back any other currency to replace the mighty US dollar, or they will face 100% tariffs, and should expect to say goodbye to selling into the wonderful US economy”.

Running covert military drills with the Russian navy in late 2022 is one thing. But it is apparently another thing entirely to gleefully join up with a coterie of ideologically misaligned countries (Iran and Ethiopia as examples) and some big totalitarian ones (Russia and China to be precise) in Sandton a year later to imagine a new currency to facilitate trade among yourselves. That dalliance will get you into real trouble.

Were Trump to impose a 100% tariff on all SA exports into the US next year, as he has apparently threatened to do if we don’t toe the US line, the affect on our economy would be rather unpleasant. Our exports to the US amounted to $8.32bn last year, about 2.2% of SA’s annual GDP.

Made up mainly of platinum and gold, ferroalloys and aluminium, agricultural products and cars, losing the US market would cause considerable pain, but we could always beg China to take up the slack. Of course, the Chinese are a little distracted at the moment, with their own imploding economy and all.

It seems that after much multipolar confusion the chickens have come home to roost. There was a price to pay after all for former foreign minister Naledi Pandor’s cosying up to Russia — about $8bn. The real cost though will be if SA is driven even further into the embrace of autocratic regimes. 

• Buckham is founder and president of Johannesburg-based international management consultancy Monocle Solutions.