What Trump presidency means for manufacturing in East Africa

Donald Trump’s return as US president has ignited discourse on the consequential changes to business around the world. The American relationship with Brics , for example, and the dominance of the petrodollar, emerge as focus areas as his policies take centre stage.

East Africa, with its complex ties to the global economy, is particularly vulnerable to changes arising from this shifting geopolitical landscape.

Trump’s likely trade protectionist measures can boost the dollar by attracting investment, as would tax-cut driven dollar repatriation, tariffs on Chinese products to the US, etc., all widely seen to be probable administrative changes.

A strengthening dollar increases the cost of imports, negatively impacting those manufacturing businesses in East African countries that rely on the currency for the purchase of raw materials or services.

To dampen the increasing pressure, diversification of trade partnerships and deepening of intra-regional trade could result, fuelling focus on regional monetary union, monetary and fiscal policies and financial systems in a bid to reduce dollar dependency.

Read: What does Trump’s ‘common sense’ policy approach mean for Kenya?

Aside from the shortage of food and agricultural inputs supplied by Ukraine and Russia, the East African region was recently impacted by blockades at the Red Sea, resulting in logistics costs and lead times increasing by more than 30 percent.

Additionally, the reliance on Middle East oil supply makes the region susceptible to supply disruptions and price fluctuations.

While yet to be seen, it is widely accepted that a Trump presidency will lead to widespread de-escalations. Ensuing resumption in supply of low-cost farming inputs and the stability of oil prices, for example, are all beneficial.

Geopolitical stability is therefore critical to East Africa in such areas as food security, investment in technology, communication and market access.

Trump has been openly critical about China’s economic influence and expressed willingness to confront this issue aggressively.

Chinese presence piques interest on Africa’s rare-earth minerals crucial for emerging technologies.

To achieve quick dominance, Africa is likely to experience increased investment by American businesses. In return, African countries could deepen their access to the US via Agoa, Prosper Africa and other trade partnership forums.

Opportunities to create export trade directly with the US, and with the African countries benefiting directly from vast natural resources (such as mineral-rich Sahelian countries and the DRC) will increase in importance.

Kenya and countries with a favourable balance of trade with these nations can expect higher export earnings therefore building their forex reserves. Trump's alternative stances on key issues have fueled growing uncertainty about their future, amplified by America's dominant influence on global narratives.

Amazon and Meta have scaled back on their diversity, equity and inclusion programmes in a move generally believed to be seeking to align to the conservative party’s position.

Similarly, the African Energy Security Coalition anticipates increased use of fossil fuels behind US support for global oil production.

Climate change, ecosystem protection and diversity, equity and inclusion, have transformed how companies, especially with significant or even global presence, invest and operate in Africa, fueled by the need to comply with set standards.

With shifting tides, it is possible to see change in investment priority and management policy that could set the tone for future performance.

The writer is the Head of Planning at KWAL (Heineken Beverages)