GLOBAL TRADE BATTLES: OPPORTUNITIES FOR AFRICA

The battles that the world's superpowers are waging for the electric car market, and other emerging technologies such as those related to renewable energies, may reshape the global value chain and trade flows, offering opportunities and challenges for Africa.

The US announced earlier this year a tariff increase on Chinese electric cars of up to 100%. Predictably, this decision generated a cascading reaction from other countries and economic communities. The European Union confirmed in early June that it is considering imposing tariffs of between 17% and 38% on Chinese electric cars. And other major markets have joined the battle.

As in the case of Turkey announcing tariffs of up to 40% for all types of Chinese cars, and Brazil which this year re-imposed tariffs on electric car imports and will even increase them in the coming months. Mexico applies duties as well. And the increase in trade barriers is not likely to be limited to automobiles alone. The White House has already announced that other products such as chips, medical equipment, critical minerals, photovoltaic panels, and port cranes, among others, from the Asian giant will be taxed more heavily at customs.

Washington is thus responding to China, which is accused of subsidizing certain industries with public money in order to flood the world market and control key markets and key technologies.


The consequences for Africa

With a huge production capacity that exceeds its domestic demand, Chinese firms will have to seek new markets around the world for their products. And in this context, emerging markets such as Latin America or Africa are likely to become the preferred alternative destination for these goods. The consequences for African citizens, and regional economies, could have different angles.

On the one hand, the region could benefit from better products at lower prices. International competition in general, and from some Chinese products that are difficult to market in the U.S. and Europe, could lead to better products at lower prices in the region, such as electric vehicles, solar panels, or chips.

African consumers, if the countries in the region stay out of trade disputes and with lax customs policies, will be able to take advantage of the opportunity for what is often called to as "leap frog" or leapfrogging to the latest technology products at a better price by skipping a technological stage.

Perhaps millions African citizens who have never owned a gasoline-powered car will be able to get a low-cost hybrid car for the first time, or have electricity at affordable prices thanks to the drop in the price of solar energy panels. On the other hand, opening African markets to cheap imports would represent a new obstacle to the process of regional industrialization and even unbearable competition for the region's scarce manufacturing park, whether in the automotive sector, renewable energies (solar panels, windmills, etc.) or others.