The trade wars between the US and China are not good for South Africa as they will affect the export volumes and reduce money generated by the country from exports.

This was one of the arguments by a team of students who have made it to the top 20 Nedbank and Old Mutual budget speech competition. The students had to debate on why the trade wars between the US and China are not good for global growth.

This round was won by Felica Mashimbye’s team who believed that the trade wars between the two countries were bad for the South African economy. Mashimbye, a post-graduate student in masters in financial economics at University of Johannesburg, said the trade wars which are a form of protectionism does not allow domestic sectors to grow.

“For instance, the poultry sector which the government is planning to protect through higher tarrifs as we heard in the State of the Nation Address is unlikely to grow and boost employment levels and economic growth. Protectionism is bad for countries and has allowed industries to be inefficient,” she said.

The group argued that China and US are the largest trading partners for a lot of countries and trade wars will impede on their terms of trade with other countries.  Even though the other group did not win, the judges were impressed by their argument points as well.

Speaking on behalf of the group, Chwayita Mkrola, a masters in economics student at the university of Fort Hare in Alice, Eastern Cape, said they were of the view that trade wars introduced the concept of equity in the global market.

“These trade wars will expand the market from other countries, which could lead to other countries being more resilient to negative shocks occurring, and won't have much effect on emerging economies and this will provide an opportunity for Africa to trade,” she said.