How Trump’s global tariffs could affect Tanzania

Economists have raised concerns that these tariffs could slow down global economic recovery, potentially pushing economies toward a recession.

According to Tantrade, Tanzania’s trade balance with the US has favoured the latter in recent years, with the latest report from the Bank of Tanzania (BoT) showing a widening trade gap.

In 2023/24, Tanzania exported goods worth Sh255.6 billion to the US, while imports from the US totalled Sh950.2 billion.

Tanzania’s primary exports to the US include pulses (beans), coffee, textiles, precious stones, cashew nuts, cocoa beans, beeswax, and hides.

On the other hand, the US exports laboratory equipment, machinery, electronic devices, and pharmaceutical products to Tanzania.

Independent economic analyst Oscar Mkude warned that Mr Trump’s decision could spell disaster for global trade, which was just beginning to recover from the Covid-19 pandemic.

“Countries that rely on exports to the United States will face severe economic consequences, which will have a ripple effect on global trade,” he said.

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Industries and employment sectors in these countries may experience significant setbacks, with job losses and a slowdown in growth, Mr Mkude added.

For African countries, the tariffs are especially concerning. South Africa, despite diversifying its economy, remains vulnerable, particularly with the US increasing tariffs on some of its exports.

Mr Mkude also expressed concern about the impending expiration of the African Growth and Opportunity Act (AGOA) in September, 2025. If not renewed, Tanzania and other African nations could face further trade challenges.

The political landscape is also complicated, with the US imposing tariffs not only on adversaries but also on close allies.

This, according to Mr Mkude, could escalate tensions in international relations and potentially lead to geopolitical conflicts.

“Amid ongoing global crises, including the Ukraine-Russia war, the US decision to impose tariffs is alarming. Global growth was already fragile, and with this new shock, the risk of global economies entering a recession is higher. The US plays such a critical role in the global economy that any slowdown will have a cascading effect worldwide.”

Mr Mkude also stressed that countries with high levels of debt will face increased challenges in meeting their obligations. He advised that these countries focus on diversifying their economies and producing high-value goods that could still appeal to the US market.

A blessing or a curse?

Prof Abel Kinyondo of the Dar es Salaam University College of Education (Duce) offered a mixed perspective on the tariff imposition.

He acknowledged that while the tariffs would lead to increased costs for cheaper foreign goods—particularly technology—this could eventually have a positive effect on global trade.

“The world has long been heavily dependent on the United States for goods and economic stability. In the long term, these tariff measures may force nations to reduce this dependency, potentially shifting the global economic balance and creating new opportunities for trade elsewhere,” he said.

However, financial analyst Christopher Makombe pointed out that Tanzania could face decreased demand for raw materials, including metals and agricultural products, as a result of the tariffs.

This could lead to a strengthening of the US dollar, making it more difficult for Tanzania to service dollar-denominated debt. Rising inflation in the US could also lead to increased interest rates, further complicating debt repayments.

Mr Makombe also expressed concern over a potential reduction in foreign direct investment (FDI).

“US companies may scale back investments outside the US to avoid these tariffs, which could directly affect U.S.-funded projects in Tanzania.”

Despite these challenges, Mr Makombe sees potential opportunities for Tanzania. “Companies shifting production lines away from China to avoid the 54 percent U.S. tariff could present a chance for Tanzania. However, our limited infrastructure and industrial capacity make us less competitive than Southeast Asia in absorbing such shifts.”

Global reactions

The announcement of Trump’s global tariffs has sent shockwaves through global markets. Countries such as China, Canada, Mexico, and India have been hit with some of the highest tariffs, with China facing a 54 percent tariff on its exports.

This has prompted China to threaten countermeasures, while the European Union and Canada are preparing their responses.

The announcement caused significant volatility in stock markets, with both US and Asian stocks plummeting. Gold prices surged as investors sought safer assets, and economists are now warning that these tariffs could lead to a global recession.

Other countries have voiced their concerns, with Taiwan criticizing the 32 percent tariff imposed on its exports, calling it “highly unreasonable.”

However, Taiwan’s semiconductor industry is exempt from the tariff. South Korea is grappling with the impact of the tariffs, compounded by domestic political uncertainty. The European Union has also expressed concerns over the US’ 20 percent tariffs, calling them a serious blow to the global economy.

Japan, which faces a 24 percent tariff on its exports, has expressed regret over the decision but has not yet announced countermeasures.

Similarly, New Zealand has criticized the tariffs, warning that they could lead to higher prices and inflation in the US.

Trump framed the tariffs as a step toward greater economic independence for the US, emphasizing his “America First” agenda.

However, the global economic fallout from this decision is likely to be felt for years to come.