The repercussions of US tariffs: Understanding the inertia

Just as the Earth orbits the sun, around which the planets revolve, much has happened—and continues to happen—in the realm of global trade. On 2 April 2025, Namibia was dealt a heavy blow in the form of a 21 percent tariff imposed by the United States. This means that Namibian exports such as beef, fish, diamonds, and uranium will now face a 21 percent tax upon entering the US market, significantly reducing their competitiveness. The result? Decreased demand and falling sales volumes, all driven by the tariff-induced price hikes.Namibia is not alone in this predicament. Between fifty and sixty countries have become collateral damage in the wake of US trade policies, many of which stem from the Trump administration. Some international media have gone so far as to dub this economic standoff “the Third World War of trade.”What to expectBroadly speaking, a tariff on foreign goods functions as a tax on domestic consumers, with consequences that are both domestic and international. During his campaign, Trump spoke extensively of raising tariffs—up to 60% on China and 10% on other countries. Ultimately, China faced a retaliatory 34 percent tariff, which shifted the dynamics of global trade.This era in American politics could arguably be defined as one of plutocracy—where wealth dictates the rules. When it comes to globally traded commodities such as oil, gas, semiconductors, and machinery, the implications ripple far beyond the US. BRICS and EU member states—Brazil, Russia, India, China, South Africa, and the European Union—as well as their trading partners, including Namibia, are all affected.Trade diversionHistorically, Asian countries such as Malaysia, Japan, and Taiwan benefited from US protectionist policies, stepping in as substitutes for cheap electronics, labour, and raw materials when China was targeted. This time, however, none are spared—facing tariffs of 24%, 32%, and 24%, respectively.US importers now face three difficult choices: Pass the cost on to consumers, inflating prices and risking lower demand, absorb the tariff themselves, sacrificing profits - an unlikely path for most, or seek cheaper suppliers or renegotiate contracts, which may lead to trade diversion and shifts in global supply chains.This kind of upheaval invariably alters consumer behaviour and reshapes international trade patterns.RamificationsWhile tariffs are often designed to protect domestic industries and address trade deficits, they also force other economies—especially developing ones—to adapt quickly. BRICS nations, each with distinct economic models, must make strategic decisions to shield their economies. Some may opt to reduce export prices to remain competitive, absorbing part of the burden. Meanwhile, the US Treasury benefits from increased tariff revenues.Sports without winnersThe sweeping tariffs imposed by the US threaten to cause global economic disruptions if not resolved diplomatically. There may be no clear winners here. For many developing countries, the consequences could include surplus goods with no buyers, rising unemployment, and sluggish economic growth.From a developing nation's perspective, resilience is key. We must take this as a moment of reflection and learning: to reconsider what we produce, how we produce it, and for whom. In doing so, we can work toward a future where we stand on our own, less dependent on the whims of foreign markets.* Tio Nakasole is an analyst at MONASA Advisory and Associates. The views expressed are his own and do not necessarily reflect those of his employer. Contact: theorastus@gmail.com

The repercussions of US tariffs: Understanding the inertia

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Namibian Sun 2025-04-17

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The repercussions of US tariffs: Understanding the inertia

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Namibian Sun 2025-04-17

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