What will it mean for SA?

As the United States votes for a new president today, South Africans are wondering what a win for both candidates could mean for South Africa and other emerging markets.

Donald Trump and Kamala Harris have opposing policies Could affect the US economy and global marketsso the effects will vary depending on who wins.

Each candidate has different views on trade, monetary policy, foreign affairs and climate initiatives; These views extend beyond US borders to emerging markets such as South Africa, where trade relations and capital flows can be significantly affected.

Joe Klopper, portfolio manager at Independent Securities, explores six key areas where the two candidates’ differing policy positions will impact emerging markets and South Africa amid a backdrop of global monetary easing, a weakening U.S. dollar and declining U.S. growth relative to the rest of the United States. World.

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US election: Harris vs Trump for SA

“Trump’s victory could bring short-term gains for South Africa if low US interest rates direct capital flows into high-yield markets. But Trump’s protectionist trade policies and the potential for a stronger dollar could pose challenges by increasing exchange rate volatility and complicating trade relations.

“South Africa’s dependence on raw materials and alignment with the Brics may also make it susceptible to the effects of Trump’s foreign policy stances that could strain global trade networks.”

On the other hand, he says Harris’ multilateral approach could bring long-term benefits to South Africa.

By encouraging international cooperation and supporting sustainable growth, Harris can create a more stable environment that attracts investment and stimulates development.

“South Africa’s strategic position as a key player in Africa could make it a valuable partner for Harris’ international policies focused on global economic integration and environmental sustainability.”

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Trade, tariffs and multilateral relations

Trump and Harris have completely different approaches to trade. While Trump has traditionally pursued a protectionist trade policy focused on protecting US industries, Harris is expected to prioritize multilateral trade relations, work within international organizations and promote stability.

Trump has confirmed that if re-elected, he would reinstate and increase tariffs on imports, reducing demand for exports from South Africa and other emerging markets. The effort to reduce U.S. dependence on foreign manufacturing could further weaken demand for South African goods and impact industries that depend on access to U.S. markets.

Harris would focus on strengthening ties with organizations such as the World Trade Organization, the International Monetary Fund and the African Union. This will create a more stable trading environment for emerging markets, including South Africa, where exporters can gain better access to the US market without the looming threat of tariffs.

It could also expand programs like the African Growth and Opportunity Act (AGOA), which offers African countries duty-free access to U.S. markets. With South Africa being a major AGOA beneficiary, expanding this program will provide opportunities to increase exports and strengthen the trade balance, which could lead to a stronger rand.

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Monetary policy, interest rates and capital flows

Klopper says monetary policy shapes capital flows into emerging markets, particularly U.S. interest rates. Trump’s gesture that he would welcome the president’s influence on the Federal Reserve and Harris’ approach to an independent Fed could affect South Africa’s financial stability and capital inflows.

Trump has previously pressured the Federal Reserve to lower interest rates to stimulate the US economy. This strategy could direct capital flows to high-yield emerging markets such as South Africa.

“However, his other policies could cause the US dollar to strengthen, which could put pressure on the South African rand. A strengthening dollar generally makes it more costly for emerging markets to service dollar-denominated debt, increasing inflationary pressures. “If Trump’s policies lead to a strengthening of the dollar, it could increase South Africa’s import costs and make its currency more volatile.”

On the other hand, he points out that Harris will not directly control Federal Reserve policy.

“His administration is expected to support a stable and independent Fed that prioritizes long-term financial stability over short-term economic stimulus.

“This could benefit emerging markets by maintaining stable interest rate policies, enabling economies such as South Africa to plan capital flows with less volatility. Harris’s approach could also avoid aggressive fiscal policies that could overly strengthen the dollar, help stabilize the rand and reduce inflationary pressures on imports and dollar-denominated debt.

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Foreign policy and sanctions

Klopper says foreign policy plays a vital role in shaping emerging markets, and Trump and Harris will likely pursue very different international strategies. While Trump’s assertive foreign policies could increase global trade tensions, Harris is expected to take a more diplomatic approach.

“Trump is known for his hawkish stance on foreign relations. His policies could increase tensions with major global players such as China. Given South Africa’s Brics membership and trade relations with China, such geopolitical pressures could create indirect challenges. Trump’s intensification of sanctions against key South African partners could disrupt trade networks, especially if China or other BRICS countries face further US restrictions.

“Harris’s foreign policy approach is expected to be diplomatic, avoiding open trade wars and encouraging cooperation. This will benefit South Africa by creating a more stable environment for its exports to the US and China. Greater US focus on Africa could further strengthen South Africa’s strategic position; “Harris could potentially advocate for increased development aid and stronger partnerships focused on infrastructure, technology and human capital development.”

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Commodity and resource exports

The South African economy is deeply dependent on its natural resources, including gold, platinum, coal, iron ore and chromium, making global commodity demand a critical factor. Klopper says both candidates’ policies will impact commodities, but Harris’ focus on green energy differs significantly from Trump’s more traditional energy stance.

“Trump’s emphasis on US energy independence and support for fossil fuels could keep global oil prices lower and indirectly benefit South Africa by reducing import costs. But Trump’s trade tensions with China could also affect demand for key South African exports such as iron ore and other minerals. “As South Africa is reliant on commodity exports, particularly to major markets such as China, reduced demand could hit these sectors hard.”

He warned that Harris’ climate-focused policies could accelerate the transition to renewable energy and leave South Africa vulnerable to falling demand for metals such as platinum, which are traditionally used in ‘dirty’ industries and technologies such as internal combustion engines in motor vehicles.

“In addition, South Africa’s dependence on coal-fired electricity generation and poor environmental protection record could result in US sanctions and restrictions. But Harris’ green initiatives could also reduce global fossil fuel dependence; “This could help stabilize oil prices, benefiting South Africa by reducing the cost of imports and improving the trade balance.”

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Investment flows and investor sentiment After US elections

Klopper says investor sentiment and capital flows are critical for emerging markets, which often rely on foreign direct investment to fuel economic growth. The stability of U.S. policy and market conditions can significantly impact investor sentiment toward emerging markets such as South Africa.

“Trump’s policies could increase volatility in global markets and make emerging markets appear riskier for investors. Increased market uncertainty often causes investors to withdraw from high-risk investments, potentially restricting capital flows into South Africa and other emerging markets. “Reduced foreign investment could impact South Africa’s growth, particularly in sectors that rely on foreign investment, such as infrastructure and manufacturing.”

He points out that Harris is known for her more predictable policy approach.

“Harris’s focus on stability could make emerging markets like South Africa appear less risky to global investors. Its emphasis on green initiatives and international cooperation could support South Africa’s manufacturing, mining and renewable energy sectors by attracting foreign investment.

“Harris’s policies can spur sustainable growth in South Africa’s critical industries by reducing volatility and boosting global confidence in emerging markets.”