Although the US election is happening thousands of miles away from Ghana, its possible impact on the local economy cannot be underestimated as there is a possibility of prices of goods and services rising in Ghana should the leader of the Republicans, Donald Trump emerge victorious. The Americans are going to the polls today to choose between former President Donald Trump and Vice President Kamala Harris in a keenly contested race.
A US-based Ghanaian Professor of Finance at Andrews University, Prof. Williams Peprah, maintains that Ghana could suffer the ripple effects if Donald Trump wins the elections.
The former US President is well known for what has been described as “American-centric” policies. His philosophy is “America First” which tends to prioritise protectionist policies to the disadvantage of countries and trade blocs competing with America.
Experts believe that there could be some trade wars should Donald Trump win the elections. It is anticipated that a win for Trump could reignite a full-scale trade war with China. The fear emanates from Trump’s first term when he imposed billions of tariffs on Chinese goods entering the US.
There is also a possible trade war between the US and the European Union. Trump in 2018 described the EU as a trade “foe” due to the large trade surplus the EU holds with the US. Experts believe a new Trump administration might impose tariffs on European cars, steel, aluminium, etc which could spark another trade war.
Given the global interconnectedness, Ghana like many developing economies could directly be impacted by a Donald Trump administration-led trade war in many ways.
For instance, trade tensions or wars could lead to fluctuations in major global currencies, particularly the US Dollar, Euro, and Chinese Yuan. For Ghana, which relies heavily on the dollar for trade and imports, increased volatility could make imports more expensive and worsen inflation. Depreciation in the cedi could result if there is reduced foreign currency inflow or investor confidence wanes due to global economic uncertainty.
Moreover, a trade war between major economies like the US and China could disrupt global trade flows, affecting demand and prices for Ghana’s key exports, such as cocoa, gold, and oil.
Professor Williams Peprah confirmed that “there is a fear of a trade war happening if Donald Trump decides to look inward too much. That is a major concern. We know this is elections. He may be saying what the people want to hear but probably the implementation approach may differ which may tone down the fear of that trade war.”
The Finance Professor at the Andrews University in the US further explained that “if it happens, it means prices are going to be very expensive, especially for us a country Ghana. We are already suffering from the strong dollar which is causing our cedi to devalue, if a trade war also happens, it is going to cause a lot of issues for us.”
However, there is a glimmer of hope for Ghana should the possible trade wars escalate adding that the country can leverage its rich resources to our comparative advantage amid such wars.
He noted that “we also have a comparative advantage on some resources which the US government will need. We may also have to be very strategic on how we are going to use this to our comparative advantage to negotiate with the US to benefit from it.”
