The New US Trade Policy and its Impact on Africa in the Context of the AfCFTA

This study examines the recent shift in the United States (US) trade policy and its impact on African countries within the context of the African Continental Free Trade Area (AfCFTA). Several potential outcomes combining the new US policy, retaliation by trading partners, a US-China trade war, and the AfCFTA are considered in order to estimate a range for the potential effects. A preliminary analysis of the US import tariffs suggests that they cause a significant reordering of competitiveness among trading partners in the US market, differing by product. Simulations utilising a global economic trade model reveal that the direct impact of US tariffs on African countries is small and is greatly outweighed by indirect effects originating largely from trade deflection caused by the high tariffs that the US imposes on China. This is especially true if the trade war persists and in sectors where China’s share in the US import market is high. This vulnerability to external trade policies highlights the necessity for stronger continental integration, which would reduce Africa’s dependence on external markets and enhance its resilience to global trade shocks. The AfCFTA has the potential to play a crucial role in this regard, by promoting intra-African trade and investment, and strengthening the continent’s collective bargaining power. The study highlights the importance of the AfCFTA being implemented rapidly and ambitiously, alongside further integration, to reduce Africa’s vulnerability to external trade policies and promote sustainable economic development.