Donald Trump. Picture: REUTERS
Donald Trump. Picture: REUTERS

It’s not a comfortable feeling to be caught naked when the tide goes out. And so it is when the prospect of a currency war between the US and China becomes increasingly likely.

The bad-tempered and unchecked rhetoric that streams from President Donald Trump’s Twitter account has already had a messy effect on global markets: a sell-off of emerging market currencies; a flight to bonds in stable countries like Germany and, er, Greece; and the dumping of commodities that rely on brisk trade and economic growth, like copper and iron ore. The hope is that markets will settle, Trump will be walked into line, and China won’t retaliate with more trade tariffs of its own.

The problem is that a repeated assault on market confidence is especially hard on countries whose economic fundamentals are parlous to begin with, such as SA. We are an exporting nation, reliant on base metals like iron ore and coal. Increasingly, too, we are reliant on others to buy our rapidly rising debt.

SA has to borrow to fund a profligate state that has shown no inclination to cut costs. But as the appetite for risk diminishes, so too does the money flowing to our shores. While no-one benefits from a trade war, a country with major debt and unemployment will be hard hit. Let’s hope that, in the case of the US vs the rest, the adults step in soon.