Global financial markets have been rocked by the latest tariff announcements from United States (US) President, Donald Trump and his administration, coupled with increasing uncertainty surrounding the future of South Africa’s (SA) Government of National Unity (GNU).
Maarten Ackerman, Chief Economist at Citadel, highlights that while the immediate impact of the tariffs is negative, long-term adjustments could present opportunities.
“The entire world is being forced to move out of its comfort zone. The initial impact of these tariffs are quite negative, particularly for the US, which is a consumer driven economy. The additional costs of tariffs on imported goods will weigh on economic growth and drive inflation higher, potentially increasing the risk of a recession. However, over time, the global economy may adapt, as countries and companies seek new trading partners and adjust to the evolving environment,” says Ackerman.
Regarding the political landscape in SA, Ackerman notes that uncertainty around the future of the GNU is adding to the volatility. “The market celebrated the formation of the GNU, but if it were to collapse, we could see even greater turbulence in asset classes. The rand has already reacted to the uncertainty, and continued political instability will only amplify this volatility,” he explains.
George Herman, Chief Investment Officer at Citadel, emphasises the magnitude of the tariff announcement, describing it as a “historic moment” for global financial markets.
“President Donald Trump’s tariffs were far worse than markets had anticipated. The average US tariff on other countries is set to increase from around 3% – 4% to nearly 23 – 24%, with Chinese goods facing tariffs as high as 64%. This is a massive tax on global trade, and the stagflationary impact will be significant. It will dampen global consumption and slow both US and global economic growth,” says Herman.
He adds that while financial markets had hoped for a “Fed put”, where the Fed steps in to counteract market shocks through interest rate cuts, the reality is that the Fed’s ability to mitigate the fallout from these policy shifts is limited.
“In SA, we are facing a double whammy. Not only do we face increased US tariffs, but the future of the GNU is now uncertain. The Johannesburg Stock Exchange (JSE) has already responded negatively, with major stocks like Capitec dropping significantly, and SA bonds selling off due to concerns about fiscal prudence,” Herman cautions.
Despite the turbulence, both Ackerman and Herman stress the importance of maintaining a strategic, long-term investment approach.
Ackerman emphasises that market uncertainty creates opportunities for disciplined investors. “Diversification remains key, and while volatility is unsettling, it also presents opportunities to acquire quality assets at discounted prices. Investors should remain focused on the long-term outlook rather than reacting to short-term market moves,” he concludes.