President
Emmerson Mnangagwa on Saturday directed the government to suspend all tariffs
levied on goods originating from the United States, a measure he said was
intended to facilitate the expansion of American imports within the Zimbabwean
market.
In a post on
the social media platform X, the President noted that this action underscored
Zimbabwe’s commitment to a framework of equitable trade and enhanced bilateral
co-operation.
The decision
came after United States President Donald Trump imposed an 18% reciprocal
tariff on Zimbabwe in response to the country’s
35% tariff on American products.
“This
effectively destroys any chance of local industrialisation as imports become
cheaper than producing them locally, unless we import technology to produce
locally and not finished products,” economist
Vince Musewe told NewsDay Business.
Another
economist Chenayimoyo Mutambasere said: “In 2023, Zimbabwe’s imports from the
United States accounted for only 0,5% of the country’s total imports, primarily
comprising machinery and agricultural products.
“In contrast,
Zimbabwe’s major import partners include China, South Africa and India — none
of whom have been offered similar concessions.”
She said the
new policy would not address the strained relations between Harare and
Washington.
Much of
Zimbabwe’s public debt of over US$21 billion hinges on the American
government’s interest in supporting the southern African nation’s efforts in
clearing its overdue obligations.
Mutambasere
noted that the 18% tariff on Zimbabwean exports to America would be an
immediate challenge if remains in place.
This is because
America is a major export destination for local goods, which totalled US$48,15
million last year, a monthly average of US$4,01 million, according to the
Zimbabwe National Statistics Agency.
“From an
economic perspective, this move significantly increases the cost of exporting
to the US, making Zimbabwean goods less competitive compared to products from
countries without similar tariffs,” Mutambasere said.
“For local
exporters, the immediate challenge will be finding ways to absorb these
additional costs without passing them on to consumers. To remain competitive,
companies will need to focus on reducing their production costs.”
Without
addressing these underlying cost issues, she said, Zimbabwean products risked
being priced out of the American market, leading to reduced export volumes and
potential revenue losses for businesses.
Economist Tony
Hawkins said that the tariff removal would intensify global competition,
potentially shrinking the export market, which could further disadvantage
Zimbabwe’s already struggling export sector.
“The Zimbabwe
government believes that it will earn brownie points by abandoning tariffs on
US imports, which is just one more political misjudgment on its part. Not very
smart - just pathetic. The real impact on Zimbabwe will be negative, but
because the bulk of Zimbabwe’s exports are raw materials, commodities and gold,
it is unlikely to suffer directly from the global tariff war,” he said.
“The indirect
impact will be slower global GDP [gross domestic product] growth. Slower world
trade growth means that the total world export market will stagnate, even
shrink, and become more competitive, which is bad news for Zimbabwe with its
absurd anti-export trade and exchange rate policy.
“The overall
effects will be inflationary — worldwide and in Zimbabwe — and the ZiG exchange
rate will devalue. The budgetary situation will worsen, money supply growth
will accelerate and the RBZ’s (Reserve Bank of Zimbabwe) exchange rate and
price stability will be shown to be the charade that we know it is.”
He said
Zimbabwe’s decision would likely lead to increased unemployment and poverty,
heightened political and country risk and a decline in domestic and foreign
investments.
“It is a bleak
outlook but sadly policymakers and business leaders [if they still exist in Zimbabwe] continue to
believe the prattle emanating from budget surplus Mthuli Ncube [Finance
minister] and exchange rate stability Mushayavanhu [RBZ governor John] who live
on a different planet from the rest of us,” Hawkins said. Newsday
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