South African central bank chief Lesetja Kganyago flagged that dollar depreciation because of US tariffs and deflation in China are clouding the outlook for inflation locally ahead of a rate-setting meeting at the end of the month.
After reneging on plans to impose sweeping duties on US trading partners earlier this year, President Donald Trump renewed his threat to institute them by Aug. 1 unless nations reach bilateral trade deals with it. The country is South Africa’s largest trading partner after China.
“The big thing about the tariffs is that they would impact on economic activity,” Kganyago told Bloomberg in an interview Tuesday on the sidelines of a meeting of the Group of 20 bloc of nations just outside South Africa’s eastern port city of Durban. “What you will face is that you might end up with inflation yourself.”
Price increases normally affect the nation that imposes tariffs, but if other countries start retaliating, “then you
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