Dr. Mahamudu Bawumia, Ghana’s former Vice President, has urged African leaders to avoid using tariffs as a knee-jerk response to trade deficits, warning that such measures fail to tackle the real economic problems at hand.
Speaking at the International Democracy Union (IDU) Forum in Brussels on Saturday, May 17, Dr. Bawumia stressed that trade imbalances are symptoms of broader macroeconomic issues, not trade policy failures. “You cannot fix a trade deficit with tariffs, it simply doesn’t work,” he said during a panel discussion focused on global trade disruptions and their impact on African economies.
According to Dr. Bawumia, Africa’s limited presence in global trade, accounting for only 2.5% of exports and 2.9% of imports, reflects deeper structural and economic challenges that tariffs alone cannot correct. He pointed out that trade deficits emerge when a nation’s spending outpaces its savings, making it a matter of macroeconomic management rather than border control.
“The problem is about the balance between savings and investment. If you spend more than you save as a country, a trade deficit is inevitable,” he explained.
He highlighted how historical protectionist policies like the Smoot-Hawley Tariff Act in the 1930s and more recent U.S.-China trade tensions failed to bring economic stability, often worsening conditions instead. Dr. Bawumia cautioned that the U.S.’s recent spike in tariff rates, from 2.4% to 10%, may have significant global implications.
While Africa may be somewhat insulated from direct U.S. trade shocks, he noted that some countries remain exposed. Lesotho, for example, relies heavily on textile exports to the U.S., which make up half its total exports under AGOA (African Growth and Opportunity Act).
Dr. Bawumia encouraged African nations to focus on long-term economic resilience through increased self-reliance, improved savings rates, and deeper intra-African trade, especially under the African Continental Free Trade Area (AfCFTA).
