How The U.S.-China Trade War Impacts Africa

Credit: Anne David via Iwaria

By Emmanuel Nafiu

The arguments on all sides of the ongoing trade confrontation between the United States and China are by now well known. American, European, and Asian pundits have all weighed in. But what of those countries that might be considered “innocent bystanders,” who may be either beneficiaries or victims in a trade war over which they have little control and no direct involvement?

Many of those “bystander” countries are in Africa, a continent that is seeing an explosion of interest and investment from China. At the same time, according to the Brookings Institution, the United States remains Africa’s largest investor. What are the concerns, and views of African experts? 

A snapshot of three African voices, and a banker in Hong Kong, help gauge the diverse sentiments being felt across the continent as Africa once again feels the repercussions from a great power contest. Quoted in The Daily Monitor, Uganda’s most widely read English-language online daily, economist and Makerere University lecturer Fred Muhumuza says that China will be aggressive in looking for replacement markets outside of the United States. This will result in China “dumping its products very cheaply into the Ugandan market to try and consolidate what it has lost in [the] USA market,” he predicts. 

“This will have a negative impact on our local products and manufacturing sector since we may not have the capacity for trade protectionism here as the USA does,” continues Muhumuza.

Samuel Alemu sees yet another negative consequence of the trade war. The Harvard-educated lawyer, writing in Ethiopia’s The Reporter, suggests that “when China-manufactured goods face tariffs, they are likely to end up in the domestic market, curbing the pace of domestic economic growth and reducing export opportunities for countries sending their goods to China.” Given the challenges involved, “Ethiopia will have to be particularly creative using the trade war between the US and China as a trade benefit,” Alemu writes. 

Ethiopia’s economy is in a period of transition. Much has been privatized, but major sectors remain under government control, such as financial services and telecommunications. Alemu sees the trade  war as an incentive to continue economic reforms: “[I]t is the moment of truth for Ethiopia to rethink its trade practices and become a full participant of international and global trade to benefit from [the] U.S.- China trade war.”

On the other hand, a leading authority in Nigeria, Africa’s largest country by population, finds an opportunity for his country as a result of the trade war. 

If one casts the trade war as simply a confrontation between the world’s two largest economies, then the trade war “would impact the global economy negatively,” Director-General of the Lagos Chamber of  Commerce and Industry Muda Yusuf told This Day Live. But, he continues, out of this comes a positive opportunity for Nigeria.

Increased tariffs on Chinese goods going into the United States “will create  supply gaps in the U.S. market.” In other words, exports from other countries become “more competitive” thanks to the tariffs on China. Yusuf sees this as an advantage favoring Nigeria. “Within the context of the African Growth and Opportunities Act [AGOA], this situation presents new opportunities for Nigerian export in the United States market,” Yusuf says.

It remains for Nigeria to position itself to take advantage of the opening. According to the International Centre for Trade and Sustainable  Development (ICTSD), AGOA is a “unilateral scheme of preferences dating back to 2000 and has served as the bedrock of trade relations between the U.S. and sub-Saharan Africa. It grants eligible African countries duty-free access to the US markets for thousands of products.” The law is currently extended to 2025.

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