Markets on Monday are expected to crash. It is not exactly rocket science. The world hates uncertainty and what is happening right now is uncharted economic waters that no one has sailed before - all thanks to US President Donald Trump and co.
This after Trump’s latest tariff bombshell has flipped the global economic script, leaving markets reeling and wiping out more than a trillion dollars in value, and world leaders scrambling for answers.
The US, burdened with $36.2 trillion in debt - $9.2trl (R165.6trl) of which needs refinancing this year - has rolled out a bold new play: a 10% universal tariff on all imports, effective April 5, plus tailored “reciprocal tariffs” for specific nations. The White House frames it as a shield for national and economic security, but markets see it as a sledgehammer to global trade and GDP growth.
The big bet is that Treasury Bills will be refinanced at a lower rate.
Headlines scream, "Is the Word Trade Organisation dead?" And those institutions we took for granted: the World Health Organisation, NATO, International Monetary Fund and World Bank, among many, many more all face an uncertain future thanks to America.
Well known American hedge fund manager Bill Ackman @BillAckman posted on X on Saturday, "One would have to imagine that President @realDonaldTrump’s phone has been ringing off the hook. The practical reality is that there is insufficient time for him to make deals before the tariffs are scheduled to take effect. I would therefore not be surprised to wake up Monday with an announcement from the President that he was postponing the implementation of the tariffs to give him time to make deals.
"President Trump has gotten the world’s and our trading partners’ attention and elevated the importance of resolving an unfair tariff regime that has harmed American workers and decimated our industrial base over many decades. This is a critically important issue that needs to be resolved, and we finally have a president committed to getting this done. The problem, however, can’t be resolved in days, so why wouldn’t a pause make sense to give the president time to properly resolve this critical issue and to allow companies large and small the time to prepare for changes in their supply chains?" he posted.
However, it is highly unlikely Trump will put the brakes on his grand plan. And it is an epic, scary and terrifying ride for the rest of us that are forced along for the ride at G-force speed. (For the record I hate rollercoaster rides.)
How will South Africa be affected by tariffs?
What is concerning is that South Africa is right in the line of fire. Our $15bn in annual exports to the US now face a punishing 40% tariff - 30% reciprocal plus the 10% base.
To make matters worse, US Republican Congressman, Ronnie Jackson, has introduced a bill requesting a full review of the bilateral relationship between the US and South Africa. This is an unknown and in economics unknowns lead investors to be risk adverse. South Africa needs foreign investment so if the country is deemed hostile by America, other countries will cool investment as they fear poking the bear. But like it or not, South Africa can't afford to protest with our economy in the doldrums and unemployment is climbing.
Recalibration of the US economy
It is important to understand the bigger economic shift at play. US Treasury Secretary Scott Bessent laid it bare in a recent sit-down with Tucker Carlson on Friday, saying, “What’s going to be more important than the discussion with countries is the discussion with companies.”
This for me is a very key message that people can't afford to miss.
Bessent is pointing to the corporate boardroom as the real battleground. Companies can duck tariffs by setting up shop in the US, lured by juicy tax breaks and a red-tape bonfire.
This tariff move isn’t some isolated tantrum; it’s a piece of a much larger puzzle - one Trump and Bessent argue is a do-or-die recalibration of the US economy.
The Trump administration has also said that a strong economy rests on a robust consumer base - one with real spending power. Right now, 50% of US households are sidelined, too strapped to buy much of anything. The tariff strategy, paired with corporate investment, aims to bring manufacturing back, create jobs, and put money in those pockets - recalibrating the system so it works for more than just the top dogs and "pinstriped suits" on the stock market. (Trump views the stock market as another form of gambling.)
Bessent said to Carlson, “But what I do know is that the old system wasn’t working. I think that’s right. And if you look at a system that’s not working, you got to be brave to change it. What wasn’t working would have been really fun for me to come in and just keep issuing a lot of debt. It’s almost like a bodybuilder taking steroids.
"Outside looks great, you’re muscular, inside you’re killing your vital organs. That’s what was going on here. But it would have been easy to keep pumping up the economy, borrowing a lot of money, creating a lot of government jobs. There was no controversy when we’re doing all that. But you were going to end up in a calamity.”
Zoom out, and the stakes get even clearer. China’s manufacturing muscle and innovation boom - 12 945 patents in 2024 to America’s 8 609 - have the US on edge. Their cheap AI, like DeepSeek, which Trump called a “wake-up call,” is poking holes in America’s tech dominance. We are in the AI Era and Uncle Sam wants to dominate. He/she innovates most wins. (Hence the technocrat billionaires backing of Trump despite the disruption and market pain).
Trump and Bessent may have a method in the "madness", but it is still a gamble at the end of the day that could go horribly wrong. However, given that the country is on the brink of bankruptcy, desperation makes for strange bedfellows. I call it economic bullying.
The prize for the clearest explanation on what is happening, among the noise of upset and disruption, I believe goes to Tanvi Ratna (@tanvi_ratna) on X. Ratna is a policy advisor specialising in digital currencies and emerging technologies.
In a X thread she writes, "Trump’s new tariffs aren’t a trade tweak—they’re the first move in a full-spectrum reset. $9.2T in debt matures in 2025. Inflation lingers. Alliances are shifting. One announcement just set a dozen wheels in motion.Here’s what’s really happening—and why it matters. Start with the debt: $9.2T must be refinanced in 2025.If rolled into 10-yr bonds, every 1 basis point drop in rates saves approx $1B/year; so a 0.5% drop would save $500B over a decade. Lower yields free up fiscal room—without them, core spending gets crowded out.
"How to push yields down with sticky inflation and cautious Fed? Manufacture uncertainty.Sweep in with tariffs, spook the markets, trigger risk-off. Money exits stocks, floods into long-term Treasuries. A deliberate “detox” to cool the economy and cut refinancing costs. But cheap refinancing isn’t enough on its own. Even at lower rates, the debt remains enormous.That’s where the next lever comes in: cutting the deficit. With these savings, the big economic pillar to successfully deliver on @SecScottBessent's 3-3-3 plan is to get growth UP. Tariffs come in as a trigger for domestic industrial revival. The thinking is: by making imports expensive, you create room for US producers to step in." The thread is much longer and everyone should read it.
Ratna goes on to say, "If it works, it's a defining success: Debt under control, manufacturing reborn, global leverage restored, Trumpism vindicated in 2026. If it fails: Inflation, retaliation, lost midterms and strategic drift." She says we have 18 months to find out if the gamble pays off.
Economics and gambling
The good news and the bad news is that madness and genius rest on the flip side of a coin.
I waded through Trump's 1987 book The Art of the Deal on Friday to attempt to understand the mindset behind this massive disruption. I like everyone else am deeply disturbed by the current, unprecedented economic disruption.
After reading it I do feel the tiniest bit more reassured. He grew up learning invaluable lessons from Fred Trump, who meticulously counted every cent in property development and calculated every cost detail. Another line in the book that impressed me is that Trump believes in value engineering. Value engineering is a systematic approach that aims to optimise the value of a product, project, or service by analysing its functions and costs to find the most cost-effective way to achieve the desired outcome without compromising functionality or quality.
Play diplomacy game or else...
If America sneezes, the world gets ill. This is the mantra the world knows. While a healthy US is important, who would have ever predicted America with its Lady Liberty taking a big economic cudgel and swinging it at its trade partners? Nations are in economic shock, markets are bleeding. The battle lines are now drawn in the sand and a lot of hurt ahead.
Instead of the peaceful days of the World Trade Organisation, it is more akin to the movie The Hunger Games, with its third Quarter Quell. This clock-like mechanism forced the tributes to decipher the pattern and move strategically to avoid the dangers (such as hourly threats included lightning strikes at the 12 o'clock section) adding a layer of complexity to their survival.
In the Make America Great game we have been thrust into, the good news is that South Africa’s not standing still. On Friday, International Relations and Cooperation Minister Ronald Lamola and Trade, Industry and Competition Minister Parks Tau unveiled a multi-pronged strategy to tackle the tariff onslaught. Their joint statement made a case to protect the industrial base, chase inclusive growth, and navigate this mess with resilience and innovation. Among other measures, the plan hinges on negotiating favorable deals to keep US market access.
In response, governments all around the world are on the backfoot as world trade and supply chains are overhauled. They will have to put their thinking hats on to charter a way forward. One has to bear in mind that Trump sees the world as a CEO, not just a politician. Trump’s all about bold moves and dealmaking swagger. His The Art of the Deal should be on every desk in Pretoria right now.
When we head to Washington, which is hopefully sooner than later, we need our corporate A-team front and centre, guiding our government team. This isn’t yesterday’s diplomacy: it’s a new world order with new rules and no seat belt. But in this real time Hunger Game, there is a lot to lose so we can't afford not to play to win.
Philippa Larkin is the executive editor of Business Report.
*** The views expressed here do not necessarily represent those of Independent Media or IOL.
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