Bawumia Rejects Tariffs in Tackling Trade Deficits, Pushes for Economic Reform

Former Vice President of Ghana, Dr. Mahamudu Bawumia, has voiced strong opposition to the use of tariffs as a remedy for trade deficits, emphasizing that the root causes of such imbalances lie in broader macroeconomic issues rather than shortcomings in trade policy.

Speaking at the International Democracy Union (IDU) Forum held in Brussels on Saturday, May 17, Dr. Bawumia addressed the growing concern over the strategic use of trade measures and their repercussions for developing economies, particularly in Africa.

He cautioned that many global policymakers are disregarding fundamental economic principles and historical lessons in their efforts to correct trade imbalances. “There is a worrying trend where decision-makers are choosing to overlook economic fundamentals, favoring short-term political gains over sustainable solutions,” he stated.

Using global trade data to illustrate his point, Dr. Bawumia highlighted the limited role Africa plays in the international trading system. The continent contributes a mere 2.5% to global exports and accounts for 2.9% of imports, compared to the dominant roles of Asia, Europe, and North America. These statistics, he noted, reveal that Africa is more a spectator than a participant in global trade dynamics.

Dr. Bawumia firmly asserted that the imposition of tariffs will not resolve trade deficits. “You cannot fix a trade deficit with tariffs—it simply doesn’t work,” he declared. He went on to explain that trade imbalances are often symptoms of deeper economic issues, particularly the gap between national savings and investment.

“A country that spends more than it saves will inevitably run a trade deficit,” he elaborated. “This is a fundamental macroeconomic problem, not one that can be corrected with protectionist trade measures.”

To support his argument, Dr. Bawumia cited historical examples where tariffs exacerbated economic problems rather than solving them. He referenced the U.S. Smoot-Hawley Tariff Act of the 1930s, which many economists believe deepened the Great Depression by triggering a wave of retaliatory trade measures and contracting global trade. More recently, he pointed to the tariff war between the United States and China during 2018–2019, which disrupted supply chains and introduced uncertainty into international markets.

“The recent surge in U.S. tariff rates—from 2.4% to 10%—marks the largest increase since World War II. The ripple effects of this policy shift will be felt worldwide,” he warned.

Although Africa’s direct trade with the United States is relatively limited—constituting only 6.5% of exports and 4.4% of imports—Dr. Bawumia noted that certain African nations remain vulnerable to external trade shocks. He singled out Lesotho, where half of the country’s exports to the U.S. consist of textiles covered under the African Growth and Opportunity Act (AGOA). Such dependence, he warned, exposes smaller economies to significant risk from changing trade policies in advanced economies.

Looking forward, Dr. Bawumia predicted that Africa’s response to global trade disruptions will involve a renewed focus on economic self-sufficiency and increased intra-African commerce. He suggested that rather than reacting with protectionist policies, African countries should invest in strengthening internal markets and regional trade ties.

“The answer lies in building resilient, self-reliant economies and promoting trade among ourselves,” he concluded.

Dr. Bawumia’s remarks underscored the need for a shift in strategy among African policymakers—from reactive trade tactics to proactive economic planning aimed at long-term stability and growth.