How Pretoria handled Trump’s toxic tweet

  1. How Pretoria handled Trump’s toxic tweet  Business Day
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It shed these gains on Thursday, dropping about 2% after some traders said Trump’s comments had raised the spectre of potential US sanctions against SA.

President Cyril Ramaphosa’s office said the comment was “misinformed”. The department of international relations & co-operation held a meeting with the US embassy on Thursday to seek clarity on Trump’s views, with minister Lindiwe Sisulu saying she would also discuss the saga with Pompeo.

“SA has good political, economic and trade relations with the United States of America and diplomatic channels remain open to provide clarity on issues of mutual interest,” Sisulu said.

The US is SA’s third-largest trading partner behind China and Germany.

The divisive and emotive land debate is at a sensitive stage in SA, with parliament due to consider submissions made by members of the public on the expropriation of land without compensation.

The ANC has decided to amend the constitution to make such expropriation clearer.

The rand weakened sharply in overnight trade on Wednesday after Trump tweeted his warning about land seizures and killings of farmers. Some political analysts said Trump was seeking to divert attention from his domestic woes after his former campaign chairman was convicted on bank and tax fraud charges on Tuesday and his erstwhile lawyer and adviser pleaded guilty to eight felonies.

The rand weakened from R14.15 to the dollar to about R14.40 in about six hours of mainly Asian trade on Thursday morning. When local markets opened at 9am, the rand firmed to R14.35 and was 1.6% weaker at R14.3877 by 7.56 pm.

Standard Bank trader Warrick Butler said that the rand weakness was not purely driven by Trump’s comments, but reflected broader dollar strength as well. The comments “also raised the possibilities of sanctions against SA” in the future.

The trade partnership between the two countries has encountered its fair share of difficulties ever since disagreements arose over the African Growth and Opportunity Act (Agoa) deal in 2014, when Pretoria banned US poultry imports after an outbreak of bird flu.

The then US president, Barack Obama, retaliated by threatening to suspend trade benefits for SA’s farm products. Trump has since tightened the screws on SA. In June, Trump’s administration enforced import duties of 10% on all aluminium imports and 25% on steel for several countries including SA, affecting at least 7,500 local jobs, with even more threats to impose the same duties on vehicles and car components.

Pretoria’s call to be granted exemptions fell on deaf ears.

Trump’s tweet also comes after US think-tank the Cato Institute published an editorial calling on his administration to act against SA, possibly by removing it from the Agoa deal, which allows favourable SA exports to the US.

“Donald Trump is facing a myriad of challenges at home that may impact his party’s performance in the midterms,” said political analyst Somadoda Fikeni. “Often, leaders create external enemies — for deflection purposes. He looked for enemies in Iran, Asia, Mexico so that the focus is on those melodramatic moments.

“The US being a superpower is not to be ignored, even when its leader is unpredictable and … does not have a nuanced understanding of issues; that makes him more dangerous.”

With Linda Ensor and Natasha Marrian

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