The US and China faced a significant trade deficit (over US$375 billion in 2017), with State subsidies in China’s export industries, technological transfers and intellectual property theft being the primary causes of the US-China trade war.
In response, China imposed duties on US$185 billion worth of US imports, while the US enacted tariffs on more than US$550 billion worth of Chinese goods.
Immediate global economic impacts Worldwide trade volumes have declined.
The World Trade Organisation (WTO) revised its projections for global trade growth from 2018 to 2020 downwards.
Global GDP growth slowed, particularly in sectors heavily-reliant on manufacturing. Growing uncertainty and the strengthened dollar led to capital flight from emerging markets. Key commodities for Namibia’s exports, including uranium, oil and copper experienced price fluctuations.
Commodities market instability
Mining exports (copper, uranium and diamonds) play a vital role in Namibia’s economy.
The trade war caused commodity prices to drop due to a decline in global industrial demand: between early 2018 and mid-2019, copper prices fell from US$3.30/lb to under US$2.50/lb. Amid diminished global energy investment, Namibian uranium exports remained subdued.
Emerging market currency volatility
Pegged to the South African Rand, the Namibia dollar depreciated as the US dollar appreciated in response to global unpredictability. This worsened the trade deficit, increased the cost of imported goods, and fuelled inflation.
Reduced Chinese demand for raw materials
China’s retaliatory tariffs on US energy and agricultural exports drove it to seek alternative suppliers. However, a decline in China’s overall industrial production decreased the volume of resources imported from Africa, impacting the growth of Namibia’s mining industry. Export revenues affect public investment and tax collection.
External debt and fiscal strain
As a significant portion of Namibia’s external debt is denominated in foreign currencies, servicing costs rose due to a stronger US dollar. The country faced heightened fiscal stress and limited budgetary capacity, compounded by lower export earnings.
African Continental Free Trade Area (AfCFTA) as a buffer
Operationalised in 2021, the AfCFTA provides a strategic buffer against over-reliance on superpowers.
By emphasising regional value chains, Namibia could leverage regional integration to diversify trade and bolster resilience.
Additionally, as part of the Belt and Road Initiative (BRI), China serves as Namibia’s primary infrastructure partner.
Pressures stemming from the trade war have constrained China’s ability to attract foreign direct investment. Due to funding limits within Chinese policy banks, projects such as port renovations and energy infrastructure have faced funding reductions or delays.
*Abraham Shilomboleni holds a Bachelor’s degree in Accountancy and an Honors degree in Business Management. He is also an MBA candidate at the Harold Pupkewitz Graduate School of Business (HP-GSB).