ANTHONY BUTLER | SA mitigates US diplomatic tensions with new global trade ties

Ramaphosa signs EU mineral pact, eyes deeper trade with China and India

First published in Business Day

October 22

Relations between Pretoria and Washington have deteriorated sharply during President Donald Trump’s second term, with the US administration bemoaning black economic empowerment policy, the International Court of Justice case against Israel, and an ostensible “genocide” of white Afrikaners. The SA government, however, seems to be moving reasonably adroitly to mitigate the risks posed by diplomatic tensions with the US.

Late last year, President Cyril Ramaphosa signed a significant agreement with European Union leaders to develop sustainable minerals and metals value chains. This week Ramaphosa confirmed SA’s plans to deepen trade relationships with China, building on Beijing’s recent extension of zero-tariff treatment to qualifying imports from African countries. The president also has stated ambitions in India where talks over a preferential trade agreement have restarted.

SA arguably has certain advantages over wealthier peers in adapting to the challenges of the current era. For decades, global economic policymakers in the north could rest on the comforting premise that open markets and international trade operate independently of power politics. Today, of course, that illusion is no longer tenable, as large powers have begun to deploy sanctions, export controls, and supply chain embargoes, and national security is displacing economic efficiency as the driving force of economic policy.

This incipient wave of trade wars, sanctions, and strategic decoupling is far from unprecedented, of course, and legendary mid-century thinkers like Albert Hirschman, John Maynard Keynes, and Thomas Schelling recognized that international economic integration is never politically neutral. Hirschman’s 1945 book National Power and the Structure of Foreign Trade traced how 17th-century mercantilist thinkers like Jean-Baptiste Colbert viewed international trade as a zero-sum game in which national wealth directly translated into state power.

While 18th-century liberal economists like Adam Smith and David Hume believed that free trade can promote mutual prosperity and peace, Hirschman observed that mercantilist logic inexorably resurfaces during periods of geopolitical tension. When international order fractures, trade policy quickly reverts from a vehicle for mutual gain into an instrument of statecraft and strategic coercion.

The core of Hirschman’s 1945 work is its analysis of asymmetric trade dependency. Hirschman demonstrated that when a powerful state becomes the dominant buyer or supplier for a smaller neighbour, it creates a structural vulnerability. By intentionally cultivating these asymmetric ties, the dominant power can threaten to disrupt trade, using economic leverage to extract political concessions or economic rents without firing a shot.

During the globalization of the late 20th century, policy makers in the north largely set aside Hirschman’s warnings, assuming market competition would deter large nations from weaponizing trade. Today, however, they are having to revisit classical mercantilist or “geoeconomic” frameworks to understand how hegemony, export controls, and supply chain choke points can be used to force political alignment.

As major powers construct defensive economic shields, “friendshoring” networks, and technological export restrictions, middle powers like SA face intensifying pressure to take sides. A smaller nation heavily reliant on a single power for critical technology, debt financing, or export markets risks being coerced into geopolitical alignment, or suffering severe collateral damage if those trade ties are suddenly severed.

While this situation poses many challenges, SA policy makers have never viewed international trade through a naive, peacetime lens. During the 1970s and 1980s, the apartheid state routinely weaponized transport monopolies, rail corridors, and energy grids against neighbouring Frontline States in a textbook demonstration of Hirschman’s asymmetric dependency model.

Simultaneously, liberation movement leaders were proponents of comprehensive international sanctions, oil embargoes, and financial credit freezes, while apartheid governments were forced to build sophisticated defensive economic shields, import-substitution industries, and clandestine trade networks to survive.

This shared history as proponents, practitioners, and targets of geoeconomics perhaps leaves our policymakers and business leaders more comfortable than their northern peers with supply chain adaptation, sanction evasion, and the amelioration of economic dependencies in a fracturing world.

Butler teaches public policy at the University of Cape Town