Dawie Roodt: How Trump tariffs affect you and your family
Martin Bester spoke to Dawie Roodt, founder, director, and chief economist of the Efficient Group, about US President Donald Trump's trade tariffs and South Africa's recent VAT increase.
To understand the impact of Trump's tariffs, Dawie Roodt breaks it down simply: tariffs are just taxes on imported goods.
Trump's goal? To encourage more US exports and reduce the number of goods the US buys from other countries.
He wants the world to buy American - but he also wants Americans to buy less from the rest of the world.
"He wants his cake and wants to eat it too," Roodt says.
READ: Trump warns no country 'off the hook' on tariffs
According to Roodt, Trump's trade strategy is to intentionally weaken the US dollar to make American goods cheaper and more attractive globally.
In doing so, Trump hopes to bring factories back to the US.
But here's the catch: most Americans don't want to work in factories anymore. So Roodt doesn't think it's a realistic goal.
There's a lot more going on beneath the surface, including political tensions with countries like China.
"He sees this like a business deal," Roodt explains. "Come in with a big bang and settle for something better."
But while Trump believes he's remaking the world, his approach is already slowing global economic growth, with some experts even predicting a potential recession.
What this means for South Africa
Roodt didn't sugar-coat the situation, saying South Africa is becoming increasingly irrelevant in the global economy.
The US alone makes up about 25% of the world's economic activity, while South Africa's influence continues to shrink.
Still, international events ripple into our economy. A global slowdown means trouble for us too, especially when we're already in a fragile state.
READ: EFF angry at Trump post suggesting G20 summit boycott
"We're probably going to struggle to hit even 1% economic growth," says Roodt. "We're in deep trouble, and it's only going to get worse."
And the signs are all around us - from broken traffic lights and potholes to widespread government mismanagement.
All of this adds up to a weaker economy that affects the daily lives of South Africans.
VAT increase: A plaster on a bullet wound?
To add to the pressure on households, the recent VAT increase has many South Africans feeling the pinch.
The finance minister has said the country needs money, and that's true, says Roodt, but the real issue is spending.
"The solution isn't just to get more money, it's to spend less – and spend better," Roodt insists.
Interestingly, Roodt isn't against the VAT increase.
READ: DA files court papers to block VAT hike
He believes it's fairer than taxing personal or corporate income, but he argues that it should be paired with reductions in those other taxes to balance things out.
Right now, politicians are spending more than the country can afford, and that's not sustainable.
Between Trump's unpredictable trade tactics and South Africa's internal economic struggles, the world is changing fast. And as always, it’s ordinary families who feel the impact first.
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