A 30% tariff imposed by the United States (US) on goods imported from South Africa (SA) has sparked concern across southern Africa.
Namibia is expected to feel the economic ripple effects due to its close trade and financial ties with its southern neighbour.
The new tariff, recently announced by US president Donald Trump, came into effect on 7 August.
It applies specifically to SA exports.
The SA tariff marks the highest rate in sub-Saharan Africa under Trump’s trade war, which also sees Nigeria, Ghana, Lesotho and Zimbabwe facing 15% duties.
This move by the Trump administration is seen as a punitive measure emanating from ongoing tensions between Trump and SA’s president Cyril Ramaphosa’s administration.
While the US cited trade imbalances, critics say the tariffs may be politically motivated.
Tariffs are taxes which a country places on goods coming in from other countries.
When the US places a tariff on SA goods, it means those goods become more expensive to buy for US consumers.
This policy can lead to reduced demand for SA products in the American market.
Namibia and SA are very closely linked in terms of trade and economics.
Namibia imports the majority of its goods from SA, and relies heavily on that country’s infrastructure and trade routes.
Any financial or economic strain on SA often has a knock-on effect on Namibia.
Commenting on the matter, Bank of Namibia governor Johannes !Gawaxab yesterday highlighted the expected impact of SA’s inflation trends on Namibia.
He added that while lower inflation in SA could result in long-term benefits, such as stable prices, it could also lead to short-term economic costs.
“If we target 3% inflation and utilities like NamPower and NamWater increase prices beyond that, it becomes very difficult to meet our target. There will be a loss in real gross domestic product growth of around one percentage point per year between 2026 and 2029,” he cautioned.
!Gawaxab noted that the central bank conducted simulations to understand how changes in SA’s inflation and interest rates, influenced by the new tariffs, could affect Namibia.
He added that findings suggest headline inflation could be reduced by 1.5 percentage points by 2028.
Interest rates could rise by 1.5 percentage points by 2029 due to efforts to control inflation.
Also, real GDP growth could slow down by about 1% per year from 2026 to 2029.
Also, domestic debt levels could increase due to slower economic growth.
While lower inflation can support price stability, it may also come at the cost of slower economic output in the short term.
The Bank of Namibia thus stressed the need to manage utility prices and align inflation targets between the two countries to avoid deeper economic shocks.
“Low and stable inflation brings long-term investment and growth, but we must balance that with the cost of slower output and rising interest rates,” !Gawaxab advised.
