Mthuli warns sweeping US tariffs rattle markets

SAMANTHA MADE

Finance Minister Professor Mthuli Ncube has warned that sweeping US tariff hikes are rattling global markets, undermining investor confidence and dragging down economic growth prospects, Business Times can report

As fears of a trade war mount, Zimbabwe is now lobbying Washington to secure a more favourable tariff deal to protect its export revenues and investment flows.

Zimbabwe’s Minister of Finance, Economic Development and Investment Promotion, Professor Mthuli Ncube, has cautioned that the global economy is expected to experience a significant slowdown, with growth projected to decline from 3.2% to 2.8% due to uncertainty surrounding the new US tariff regime.

The United States has been implementing significant tariff changes, including increased duties on goods from countries such as China, Canada,  Mexico, among many others,  in a move aimed at reducing the trade deficit and stimulating domestic innovation. However, these actions have sparked global concern over potential trade wars and their wider economic implications.

Professor Ncube emphasised that the new US tariff regime has “sent shockwaves” across the world and raised alarms over its impact on global trade and investment.

“Here at the IMF and World Bank Spring Meetings, a critical issue that has emerged is we’re trying to understand the impact of the new tariff regime globally, where the US has been pronouncing various tariff levels, increased tariff levels of various countries, and how then this will affect the global economy as countries retaliate or negotiate.

Clearly, this is going to slow down the global economy, and this has been well discussed here in Washington. We now think that the global economy, in terms of growth outlook, will slow down from 3.2% growth rate of GDP down to about 2.8%, so we’re shaving off another 0.4% because of this uncertainty. This uncertainty has various channels; it’s got to do with the trade activity in the first place. It is also impacting investment flow,” said Ncube.

He also expressed concern over how the new tariff regime will affect bond yields, monetary policy, and its knock-on effects on base metal prices.

“The new tariff regime is also impacting bond yields, for example. It is going to impact also on monetary policy, because monetary policy has to respond to certain needs and impacts of these tariffs on various economies. So it’s affecting a lot of things.

There are multiple channels of impact, and the end result is a slowdown on the global economy. For us in Zimbabwe, that’s where we worry about its impact on base metal prices and the prognosis on base metal prices, because we export quite a bit of that, the impact on lithium, palladium, rhodium, and other minerals that we export. But the upside, of course, is on the gold price.”

Despite the risks, Ncube acknowledged there could be some economic gains for Zimbabwe amid the uncertainty.

“This uncertainty caused by the new tariff regime or the new tariff global order is causing uncertainty, and this uncertainty is translating to higher gold prices, and we are benefiting from that as a country.

So on one hand, we benefit from the higher gold prices, and on another, we face the pain of potentially lower commodity prices on base metals and some of our exports. So this is something that we’re trying to understand here, and there are lots of discussions about these matters here in Washington,” he said.

Additionally, Ncube disclosed that his ministry is actively engaging with US officials to negotiate a new bilateral tariff regime that would be more favourable for Zimbabwean exporters.

“In terms of negotiating a new tariff regime between the two countries, we’re also engaging on that to make sure that we come out with a favorable position, because we’re on the current account deficit with the U.S., and we feel that perhaps Zimbabwe, at the end of the day, we should be on the lowest tariff possible, which is 10 percent, as opposed to the 18 percent that has been proposed.”