OPINION | Tariff war gives SA an opportunity to realign to new trade order, embrace regional integration

The world is once again being reshaped not by bombs or pandemics, but by tariffs.

The ongoing tariff war instigated by the US, now extending its reach beyond China to include Europe, Mexico and others, represents more than economic brinkmanship.

It is a reconfiguration of the post-World War 2 economic order that relied on multilateralism, comparative advantage and liberal trade. For SA and the rest of the world, this disruption signals both risk and opportunity. The question is not only what the damage will be but how we adapt, strategically and sustainably.

At the heart of this tariff crusade lies economic nationalism rooted in the realist school of international relations, where states act primarily in their own self-interest, often unilaterally. The US administration's approach of leveraging tariffs to force renegotiations of trade deals signals a pivot from co-operative globalism to transactional bilateralism.

The imposition of punitive tariffs on steel, aluminium and hi-tech goods is justified on the grounds of national security and unfair competition, particularly targeting China’s subsidisation and intellectual property practices.

But this is more than a spat between two superpowers, it is a tremor that shakes the foundation of global economic interdependence.

When the world's largest economy tightens its trade grip, the consequences are global. According to classical Ricardian theory, countries benefit by focusing on their comparative advantages. Tariff walls distort this natural allocation of resources, creating inefficiencies and retaliation cycles. Supply chains fracture, consumer prices rise and growth slows.

From a Keynesian perspective, tariffs reduce overall demand and investment flows, particularly in export-driven economies. Even the IMF has warned that prolonged trade tensions could cost the global economy more than $1-trillion (R19-trillion) in lost output. Emerging markets, particularly those reliant on exports or investment from the West and China, are caught in the crossfire.

For SA, the consequences are tangible. As a small open economy integrated into global value chains and heavily reliant on both US and Chinese capital and exports, any volatility in trade flows and investor confidence directly affects GDP growth, employment and the currency. Already, we have seen the mining and manufacturing sectors jitter under the uncertainty of global demand.

SA cannot afford to be a passive observer. While we may not wield the economic clout of the G7, we do possess strategic levers. First, our membership in Brics and Agoa (Africa Growth and Opportunity Act) gives us diplomatic and economic influence. We must leverage these platforms to push for de-escalation, fair trade reforms and Africa-centric trade terms.

Second, SA should intensify intra-African trade through the African Continental Free Trade Area (AfCFTA). By reducing dependency on traditional powers, Africa can begin to insulate itself from the external shocks of tariff wars. Regional value chains can become a buffer, driving industrialisation and regional integration.

To navigate this turbulent landscape, countries, especially developing ones such as SA, must adopt global business strategies that are both adaptive and anticipatory.

SA must enhance its factor conditions (skills, infrastructure, innovation) and support domestic firms to be globally competitive, not just export raw materials but finished goods.

Organisations and nations must diversify supply sources and markets. Depending on one or two global partners (for example, China or the US) is risky. SA companies should look East and West, and deepen links with Latin America, Southeast Asia and continental partners.

Governments and large corporates should develop multiple scenarios ranging from a full trade war escalation to a post-tariff detente and prepare agile responses. SA’s business sector, especially those in exports, should have clear strategies for each.

SA’s foreign policy must be recalibrated towards economic diplomacy. Negotiating better trade deals, attracting diversified investment and influencing global trade rules from the Global South perspective are all imperative. Diplomats, academics and business must form a united front in shaping a narrative that puts SA’s interests first, but not in isolation.

We must also engage with multilateral bodies like the World Trade Organisation (WTO), advocating for the protection of developing economies and the maintenance of a rules-based trading system. Otherwise, we risk a descent into a neo-mercantilist world order where might, not right, governs trade.

The global tariff war is not just a battle of taxes, it is a test of resilience, foresight and leadership. For SA, this is not a time for reaction but for strategic realignment. By embracing regional integration, investing in competitive capabilities, and engaging in proactive diplomacy, we cannot only survive this disruption but also emerge stronger.

To academics, professionals, and policymakers, this is your moment to shape discourse and influence decisions. The world is changing. Let us not be bystanders. Let us be strategists.

• Dr Boikanyo is an academic at the University of Johannesburg