For the moment, there’s no reason to believe US President Donald Trump won’t follow through on his threat to impose blanket import tariffs of 25% on the US’s only two land neighbours, Canada and Mexico.
Trade between the three countries is worth a staggering $1.93-trillion (about R36-trillion). It’s the largest and best-integrated trade zone on earth. Canada is the biggest market for US goods exports, while Mexico is second.
Trump accuses them of facilitating the entry into the US of fentanyl, a highly addictive opioid generated primarily in China. Both Canada and Mexico swear they are doing what they can to prevent trafficking in the drug, but Trump is determined to forswear diplomacy and to lean on trade muscle instead to get his own way in his second term.
In the process we become lost in the detail of what he is doing: threatening Denmark because it won’t sell him Greenland; removing security from officials and military officers who had done his bidding — sometimes carrying out orders to murder targets in Iran and the Middle East — before turning against him; having FBI officers who investigated him, under orders, after the attack on Capitol on January 6 2021, marched out of their offices and fired. Trump doesn’t care.
Thankfully, we already know this, but the real damage he does is much more subtle. It’s a profound attack on the trust that binds people, nations and alliances together. How much of the world do we simply take on trust? You buy a car and drive it at high speed, trusting the brakes to slow you down. You take pills on trust and give banks your money on trust. Without trust, we don’t have a civilisation. You can’t check under every stone you walk on.
Ernest Hemingway once said the best way to find out if you can trust someone “is to trust them and see what happens”. What Trump is doing to the slim majority of Americans who voted him back into the White House is showing them just what can happen. He is going to break things and dismantle traditions and institutions. He is, insanely, going to break or stress the US’s closest allies.
We have no idea yet whether Trump will be cruel or kind to us, but his embrace of Israel and its prime minister suggests we should probably be prepared for the worst
And, inevitably, anything he does is going to affect us here in South Africa. We have no idea yet whether Trump will be cruel or kind to us, but his embrace of Israel and its prime minister suggests we should probably be prepared for the worst. We know why.
What is more, we run a trade surplus with the US, which will earn us a place on his trade reprisals “to do” list. President Cyril Ramaphosa, who is good at the bowing and scraping bits of diplomacy, says he plans to invite Trump to make a state visit.
That’s easy because we chair the Group of 20 this year and there’s a summit Trump should probably come to in Johannesburg. By then, though, he may have met his match. That will be when he tries to force his monetary authority, the US Federal Reserve, to take political instructions — most likely an order to refrain from increasing interest rates when, as is certain to be the case, his tariffs on Canada, Mexico and the rest of the world cause US prices, and inflation, to rise. Trump sees no reason he shouldn’t tell the Fed what to do, so a showdown is looming.
At risk is the deep trust the world has in US capital markets. Deprive a German or Japanese investor of the confidence required to forecast the likely course of the dollar and they will quickly begin to look for alternatives. Even down here, confidence in our ability to predict the value of our currency against the dollar is fundamental to our ability to get up in the morning and run our businesses.
Politicians obviously play with our trust all the time, and in this regard Ramaphosa is no exception. He reveals little of himself and plays almost all his cards out of the back of his hand. Why, for instance, has he kept former justice minister Thembi Simelane — who took money from the proceeds of the VBS Mutual Bank robbery — in his cabinet? Some people say she’s going to be his successor choice at the ANC electoral conference at the end of 2027. He, of course, won’t say this — but it’s little wonder we struggle to get off the world’s banking grey list.
His big slip was the dollars down the sofa at Phala Phala. How dumb was that? I don’t think he has lied about it yet, but the charges he subsequently faced were both absurd and hot-headed. They assumed the money was corrupt, but what if it wasn’t? Parliament should hold a new inquiry, and this time keep it sober. Just because the money wasn’t corrupt doesn’t mean it was clean.
Trump’s lies and deceit and greed and cowardice cry out for an honourable and courageous response, an echo of integrity and courage. Why can it not come from us?
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