Modern Mining January 2025

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Trump’s proposed tariff regime and African minerals By Dr Ross Harvey, director of research and programmes at Good Governance Africa (GGA)

Dysfunctional ports, rail and road (logistics) are among the most urgent requiring attention.

Dr Ross Harvey, director of research and programmes at Good Governance Africa (GGA)

The US will have to get smarter in how it engages in Africa.

A recent article by Craig Singleton in The New York Times – aside from appearing like a job application to work in the new Trump administration – fell only just short of endorsing an America-first attempt to beat China into economic submission through aggressive tariffs: “If Mr Trump can couple the blustery style of his first term with a more focused strategy and tighter discipline, the next four years are a golden opportunity to keep Beijing on the defensive and permanently transform the rivalry in America’s favour.” Singleton is right, of course, that China is a declining power. Apologies to all the China apologists reading this column. I’ve been following this debate about China as a rising power for two decades now. There is nothing in the data that should convince anyone that China will out-compete the US. As the graph below makes clear, China is nowhere close to the US in economic performance terms. US GDP per capita, by 2023, was US$73,637 (in constant 2021 $ purchasing power terms). By contrast, China came in at US$22,135. On average, US citizens are 3.33 times wealthier than Chinese citizens. China’s progress over the last twenty years has been impressive on the surface, and the differential has converged. In 2004, US GDP per capita was US$58,153. China’s was US$5,567. You can do the maths. My prediction – at which economists have typically not been that good – is that the differential is unlikely to fall further. China’s growth has been off a very low base. Moreover, the country will grow old before it grows rich thanks to the legacy effects of a disastrous “one-child” policy. China’s political institutions also render its economic

institutions fundamentally incapable of creating the kind of dynamism unleashed in the 1980s under what Yasheng Huang called “directional liberalism”, which ended abruptly with the Tiananmen Square massacre in 1989. Xi Jinping’s iron grip over power within the Chinese Communist Party since 2012 means that he is surrounded only by yes-men who will not tell him that his economic and foreign policy decisions are wrong-headed. It is hard to see how the country will recover from building ghost cities that created an enormous property bubble, or how it will now manage its growing debt with an overheated and stagnating economy. Its attempts to move away from an export led manufacturing growth model into a more services and consumption-orientated economy haven’t worked because the wealth base is neither high enough nor sufficiently broad-based to effect the change. However, it does not follow that the US should now kick China while it is down. This is an autarkic temptation that defies wisdom. Singleton points out that Trump has “proposed tariffs as high as 60 percent on Chinese imports”. If you view big-power rivalry as a zero-sum game, this approach might appeal. But the significant risk here is that blanket or arbitrary tariffs on Chinese products would drive US inflation up, which would be an unnecessary global loss. Inflation, in a nutshell, is the primary factor that brought Trump to power, notwithstanding out-of-touch urban elitism displayed by the Democrats. While US unemployment is enviously low, inflation hurts cash flow among lowest-paid workers, the very people who voted for Trump. These are the same workers whose

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