US President Donald Trump’s rapid-fire tariff agenda is upending the global economic and geopolitical order.
Not since World War II has the global trade landscape experienced such significant upheavals.
It goes without saying that there will be major implications for global and South African investors.
Since returning to office in January 2025, President Donald Trump has implemented a sweeping series of tariff measures – the latest of which is a 25% tariff on all car imports to the US. These decisions have sent shockwaves throughout the global economy and created significant market uncertainty.
At the latest SA Reserve Bank meeting, Governor Lesetja Kganyago summarised the current global state of play:
"The world economy is experiencing extreme levels of uncertainty. Trade tensions have escalated, and longstanding geopolitical relationships are shifting abruptly."
V is for volatile
The fallout from the tariff announcements has been wide-ranging. It has triggered volatility in currency markets, particularly affecting emerging market currencies. Developed countries’ stock market performance has sharply diverged, with European equities outperforming the US this year.
The widespread uncertainty has also weakened consumer and business confidence, resulting in many companies adopting more cautious approaches and postponing investment decisions, which could weigh on global growth prospects.
Copper prices are surging to record highs in anticipation of potential tariffs, and gold prices have reached record highs of more than $3,000 an ounce as investors seek safe-haven assets amid the uncertainty.
C is for caution
The tariff situation has prompted the South African Reserve Bank to keep interest rates unchanged at its last meeting despite cooling inflation. This reflects its concerns about the potential inflation impact of tariffs and their impact on the rand.
There will also likely be fewer future rate cuts than anticipated over the next few years as the SARB adopts a “meeting-by-meeting” approach due to the uncertain environment. As Standard Chartered economist Razia Khan noted, “The global risks are real – and the SARB’s caution is justified.”
The impact on SA’s growth will depend significantly on how the tariff situation evolves. If trade tensions ease, the effect may be limited. However, a full-blown trade war would likely have substantial negative implications for economic growth.
The bottom line
As long as tariffs dominate the global agenda, investors in South Africa can expect:
• Elevated levels of market volatility
• Periods of weakness in the rand, particularly if trade tensions escalate
• Limited interest rate cuts
• Challenging times for sectors heavily exposed to global trade
As such, diversification across markets and asset classes remains all-important, and investors should avoid making any rash, fear-based investment decisions. Though the world order may be completely changing before our eyes, unanticipated investment opportunities typically emerge amid maximum uncertainty, so be on the lookout.
If you have any further questions about how all of this affects your investment portfolio, please give us a ring.
Disclaimer – *The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.
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