GhanaWeb Feature by Mawuli Ahorlumegah
United States President Donald Trump under an executive order on Tuesday March 4, 2025 imposed a sweeping 25% tariff on goods from Mexico and Canada, alongside a sharp increase in tariffs on Chinese imports.
The decision which has been described by many as an extraordinary measure aimed at addressing security concerns and trade imbalances, has already set the stage for economic retaliation from key US trading partners.
As the trade war escalates, the impact is expected to extend beyond North America and China, reverberating across global markets, including Ghana’s economy.
GhanaWeb Business examines the ripple effect of these tariffs on Ghana’s economy, which is on the cusp of recovery.
US tariffs and the global economy
The tariffs imposed by the US apply to a wide range of goods, including fresh produce, automobiles and parts, and electronics such as mobile phones and computers. With the US importing over $1.4 trillion worth of goods from Mexico, Canada, and China combined, accounting for more than 40% of its total imports, this move is expected to disrupt global supply chains and cause price surges worldwide.
In response, both Canada and China have announced retaliatory tariffs on US goods, targeting essential commodities such as wheat, corn, soybeans, dairy, and meats. This development is likely to send shockwaves through commodity markets, affecting economies dependent on these trade flows, including Ghana.
Impact on Ghana’s trade and economy
While Ghana is not a direct player in the tariff war, its economy remains vulnerable to its ripple effects in multiple ways including:
Higher import costs for Ghanaian businesses and consumers
Ghana imports a significant share of electronics, machinery, and automobile parts from the US, Canada, China, and Mexico, either directly or through third-party nations.
The new tariffs will likely increase the cost of these goods, pushing up prices in Ghana’s local market. Businesses dependent on these imports, including automotive dealers and electronics retailers, may have to pass on the increased costs to consumers.
Commodity price volatility
With China imposing tariffs on US agricultural products like wheat, corn, and soybeans, global commodity prices could see sharp fluctuations.
Ghana, which imports wheat and other agricultural products, may experience price hikes, affecting industries such as bread and beverage production. Furthermore, changes in global demand for cocoa beans which one of Ghana’s major exports could impact its revenue streams if the trade war alters investment and consumer spending patterns in key markets.
Disruptions in Ghana-China trade relations
Ghana maintains a robust trade partnership with China, relying on the Asian giant for infrastructure financing, imports, and business investments. If the US intensifies its trade war, Chinese economic slowdown or shifts in global supply chains could affect Chinese investment in Africa, including in Ghana.
Additionally, a weakened Chinese economy could also reduce demand for Ghanaian exports like oil and minerals, further impacting government revenue.
US-Ghana trade and investment uncertainty
If trade tensions escalate, Ghana may find itself in a complex position regarding future trade negotiations with the US.
American businesses facing higher costs due to tariffs may reduce investment in African markets, affecting sectors such as manufacturing, technology, and construction. Moreover, if the US takes a broader protectionist stance, future Ghana-US trade agreements could be impacted.
The way forward for Ghana
As global markets adjust to the new trade landscape, Ghana must adopt strategic measures to mitigate potential economic disruptions which include the following;
Diversifying trade partners: Ghana should strengthen trade agreements with the European Union, Asia, and within Africa, leveraging initiatives like the African Continental Free Trade Area (AfCFTA) to reduce dependence on US and Chinese markets.
Boosting local production: Investing in local manufacturing and agriculture will help lessen reliance on imports, insulating the local economy from external trade shocks.
Monitoring global market trends: Government agencies and businesses in Ghana must stay informed about international trade developments to make data-driven decisions that protect Ghana’s economic interests.
While the full extent of the impact remains uncertain, Ghana’s proactive response will determine how well it weathers the storm of the escalating US tariff war.
The coming months will be critical in shaping the country’s trade resilience and economic stability in an increasingly volatile global economy.