Africa’s Trump Card for Navigating Trade Wars

(5 Minutes Read)  

Africa must navigate its relationships carefully, balancing its vast market potential with the critical minerals the US requires. As the demand for cobalt, lithium, nickel, and other rare earth minerals rises for consumer electronics and electric vehicles, securing a stable supply is essential for the US. As these resources are crucial for the US, imposing tariffs could be self-defeating.

Global business firmament has been darkening with trade war clouds since 2010, and 2020s.  In 2025, it seems to have reached a climax.  During his first term in Office, President Trump singled out China, alleging that it employed underhand trade tactics. After his return to the White House in January 2025, he kicked off a full-scale global tariff war. Hefty taxes on imports from America’s biggest trading partners — China, Canada, Mexico and EU were rolled out. The outcome is a series of tit-for-tat tariffs.

The US tariffs and the retaliatory tariffs by the target countries have disrupted the international trading landscape that is already battered by geopolitical challenges such as the conflicts in Ukraine and Israel and the Red Sea Crisis.

Africa, though not a central player in the trade wars, is likely to get caught in the crossfire. For the continent, with a rapidly growing population, grappling with poverty and other development challenges, the impact will be multifold, altering trade patterns, investment flows, regional cooperation, and economic growth. International Monetary Fund (IMF) forecasts that global “geoeconomic fragmentation” due to trade barriers could wipe off 4% of sub-Saharan Africa’s GDP.

Africa is a leading supplier of raw materials and importer of finished goods. Most of the African nations are exporters of oil, minerals, and agricultural products to China, the EU, and the US. As trade conflicts deepen between the major economies, the demand for African commodities and supply to the continent is bound to fluctuate, leading to revenue losses.

For instance, Zambia, Angola, and the Democratic Republic of Congo rely heavily on the global demand for copper, oil, and cobalt. The current trade disruption may dampen the demand.

Since March 2025, Trump has imposed a 25% tariff on all steel and aluminium imports globally. This will be a severe blow to South Africa, Mozambique, Egypt and Nigeria- major exporters of these products to the US. South Africa exported over USD 400 million worth of iron and steel to the US and almost USD 600 million worth of aluminium in 2023.

Similarly, Foreign Direct Investment (FDI) into Africa will also face reassessment. Multinational companies are bound to adjust their production and supply chains in response to new tariffs and trade restrictions.

China over the years has been increasing its investments in African infrastructure, technology, and manufacturing. The trade conflict with the US has led to a shift in China’s investment strategy, with a greater focus on expanding its Belt and Road Initiative (BRI). Though the BRI brings much-needed infrastructure development, it also raises concerns about increasing African debt levels and the sustainability of Chinese loans.

The ongoing trade disputes have implications for Africa’s technological advancement, particularly in fintech, e-commerce, and mobile services. Africa’s technological and digital infrastructure advancement has been driven by Chinese technology companies, such as Huawei. With the escalating tensions between China and the West, Africa’s reliance on Chinese tech may expose it to geopolitical risks, hampering Africa’s digital transformation.

The consequences of the global trade war are not restricted to economic hardships. The rising unemployment, inflation, and economic instability could exacerbate existing social and political tensions in African countries with weak governance.

A saving grace for Africa is that it runs a very minor trade deficit with the US, about USD 7.4 billion in 2024 compared to China’s USD 300 bn. Most of this came from the trade covered under the African Growth and Opportunity Act (AGOA). In 2023, almost 85% of the US trade deficit came from just three – South Africa, Nigeria, and Ghana. The primary exports to the US from these countries are platinum and crude petroleum, critical resources for the US. Hence US may not risk tariffs on them which could turn out to be self-defeating.

However, any bid to alter or axe AGOA that provides tariff-free access to the US market for African countries is a major concern.

How can Africa insulate itself from the consequences?

Africa needs to evolve a strategy of a more self-reliant economic framework.  Effectively harnessing the potential of trade within the continent is one way. The African Continental Free Trade Area (AfCFTA) represents an important step towards creating a single market to reduce Africa’s exposure to the volatility of global trade.

Diversifying from traditional business partners like the US, and Europe is another. The continent could reach out to new and emerging economies in the BRICS, ASIA and Middle East.

Africa has to play its cards carefully and do a balancing act. Apart from the huge market, Africa is home to critical minerals that the US needs. According to projections, the United States will need an increasing supply of critical minerals such as Cobalt, lithium, nickel, and many other rare earth minerals for its consumer electronics, electric vehicles, drones, and satellites. Critical and strategic minerals supply is a key priority for the Trump administration. Perhaps Africa can offer the US, access to its minerals in exchange for the continuation of AGOA.

The continent enjoys geopolitical and strategic significance also. Given the growing influence of its rivals like China and Russia in Africa, the US may not show a red card to Africa.

The way ahead for Africa will require careful management of both internal and external resources. If Africa presents a united front, the continent can successfully negotiate mutually beneficial partnerships with the US. Such strategic negotiations will be key to surviving the current economic challenges.