How African businesses should respond to Trump’s provocative agenda
Police officers are seen by the entrance of Pullman Hotel during the opening session of the 18th African Growth and Opportunity Act (Agoa) Forum in Abidjan, Ivory Coast on August 5, 2019.
US President Donald Trump has recently been issuing a series of executive orders, reflecting a departure from business as usual in US foreign policy.
Rooted in his campaign promises, his administration is prioritising domestic interests by addressing illegal migration, restructuring government to reduce federal spending, reassessing security assistance to allies such as Ukraine, and reviewing US engagement in foreign aid, among other key areas.
Globally, the reactions to Trump's policies have varied. Countries like Israel have drawn closer to the US, while others, like China, are preparing for a potential period of retaliatory tariffs.
This decision sent shockwaves across the continent, where many countries rely on US development assistance, particularly in critical sectors like healthcare. The pause has led to job losses among aid workers, sub-contractors, and local businesses that support the aid industry.
In 2023, the US provided $14.9 billion in aid to Africa, supporting thousands of projects and SMEs. The potential reduction in funding could disrupt entire value chains, from real estate markets that accommodate aid workers to consultancy firms and the airline industry, which benefits from frequent travel by development agencies.
The pause in foreign aid also signals potential cuts to multilateral organisations, affecting other donor contributions. The US has historically been the largest contributor to international development efforts, and its retrenchment could reshape the global aid architecture.
However, this may create opportunities for private philanthropic entities like the Ford Foundation and the Gates Foundation to step in.
South Africa, in particular, has faced direct aid cuts, with the Trump administration citing concerns over human rights violations against the white minority population under the Land Expropriation Law.
This law aims to redistribute land taken from Black South Africans during colonial rule, but Trump, heavily influenced by South African-born billionaire Elon Musk (now his top aide), has criticised it as discriminatory.
Additionally, Trump's dissatisfaction with South Africa's stance in the International Court of Justice (ICJ) cases against Israel (for atrocities in Gaza) has further fueled tensions. His administration has even proposed a programme to grant asylum to white South Africans in the US.
Trump's tariff strategy against Canada, Mexico, and China suggests that similar measures could be extended to African exports. A rise in global tariffs could disrupt supply chains, drive up costs, and create economic instability in African markets.
Already, financial markets have reacted negatively to Trump’s trade policies, and African economies, which are vulnerable to global price shocks, may face consequences in key sectors such as energy and manufacturing.
However, trade wars create both winners and losers. During Trump's first term, countries like Malaysia and Vietnam capitalised on US-China tensions to gain market share in American supply chains.
African nations could adopt a similar strategy by positioning themselves as alternative suppliers for goods impacted by tariffs on China and other trading partners.
With the African Growth and Opportunity Act (Agoa) set to expire in 2025, its renewal remains uncertain.
Without Agoa, African nations will need to pursue bilateral trade agreements similar to Kenya's Strategic Trade and Investment Partnership (Stip). South Africa, as Agoa's biggest beneficiary, stands to lose the most, followed by countries like Kenya and Madagascar.
While this does not mean a complete severance of trade ties, African nations must prepare for a shift toward transactional, country-specific trade negotiations rather than broad multilateral frameworks.
Despite concerns over aid reductions, it is unlikely that US funding will completely disappear. The US pioneered the concept of soft power through foreign aid, as championed by scholars like Joseph Nye. Under Trump's leadership, foreign aid may evolve to align with Republican priorities, emphasizing security and private-sector investments.
As US goods face higher tariffs globally, African suppliers could step in to fill gaps, particularly in agriculture, textiles, and raw materials.
Companies seeking to bypass US tariffs may relocate production to Africa, accelerating industrialisation and job creation.
The tech sector, especially in countries like Kenya and Nigeria, could also attract new investment.
To navigate this new landscape, African governments must keep diplomatic channels open and proactively renegotiate trade and aid agreements. Strengthening regional trade frameworks could enhance Africa's bargaining power in bilateral negotiations with the US.
African nations should also draw lessons from the Non-Aligned Movement, which allowed countries to navigate Cold War tensions without being drawn into superpower rivalries.
By leveraging regional economic partnerships, Africa can cushion itself against unpredictable shifts in US policy and push for trade terms that better serve its economic interests.
Dr Winnie Rugutt-Chebon (PhD) is a Lecturer, Diplomacy and International Relations and Programme Lead at the Africa Center for the Study of the US (ACSUS) at the Institute of Diplomacy and International Studies (IDIS), University of Nairobi
