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SIMON BROWN: I am currently chatting with Bastian Teichgreeber, Chief Investment Officer at Prescient Investment Management. Thank you for being here, Bastian. With president-elect Trump set to take office on January 20th, many are curious about how his administration will affect global trade policies. He certainly has made waves with his remarks on tariffs, but do we truly know what to expect from President Trump once he assumes power?

BASTIAN TEICHGREEBER: Thank you for having me, Simon, and good morning. Indeed, there has been extensive debate regarding tariffs. There is considerable concern, particularly following Trump’s sweeping tariff threats against several countries that could greatly influence global trade, especially with Brics nations, which is particularly relevant for us in South Africa.

That being said, we need to approach this cautiously. He is known for his transactional nature, and he understands that tariffs can stifle growth, affecting both foreign nations and Americans as well. Therefore, it’s unclear if he will enforce all the tariff measures he has announced.

SIMON BROWN: That’s a great observation. When he once threatened Mexico and Canada, it felt more like a negotiating tactic than a true commitment to impose a 25% tariff. His transactional approach is apparent, and some experts in China suggest they view Trump’s character as manageable.

BASTIAN TEICHGREEBER: Exactly. Historically, we have suggested that Trump’s presidency would yield more uncertainty than Biden’s potential administration. However, I’m not entirely convinced that’s true. Trump is indeed transactional and strategic; his genuine concern is the welfare of the American people, which is understandable.

For those of us in South Africa, the most pragmatic approach is to align with his policies. Attempting to develop an independent Brics currency or moving away from the dollar might not yield the desired results, given that he is likely to continue using the dollar’s strength and its status as the global reserve currency.

SIMON BROWN: Isn’t there a paradox in Trump’s advocacy for a strong dollar, yet a weaker dollar could potentially be beneficial for the U.S.?

BASTIAN TEICHGREEBER: Yes, in the long run, a weaker dollar might be beneficial, but generally, Trump more favors a strong dollar. Furthermore, the U.S. economy is currently less dependent on exports; it is mainly consumer-driven, which allows them to maintain a robust dollar. So, that’s the current path.

The policies he is expected to implement, including tariffs and government spending increases, should support the dollar, which has already shown signs of strengthening—suggesting that Trump’s policies might indeed bolster the dollar’s resilience.

SIMON BROWN: So, is it as simple as assuming that a stronger dollar resulting from Trump’s policies will automatically lead to a weaker rand, especially considering much of this is already built into expectations?

BASTIAN TEICHGREEBER: It’s not quite that straightforward, to be honest. Our South African economy is closely tied to global growth. Typically, our currency performs well when the global economy is prospering. Many of Trump’s initiatives could stimulate economic growth.

If we consider his intentions to deregulate U.S. businesses and cut taxes to enhance the consumer economy, that might improve global growth prospects and, consequently, benefit the rand, especially as a high beta currency.

Thus, it’s feasible for both a stronger dollar and a stronger rand against other currencies.

SIMON BROWN: One last observation—geopolitical tensions remain a pressing issue, with ongoing conflicts in Ukraine, Syria, and the Middle East. Investors, particularly in Europe, are certainly keeping a close watch.

BASTIAN TEICHGREEBER: Absolutely. I concur that geopolitical tensions are likely to present significant risks as we move into 2025. Uncertainty appears to be a lasting theme, especially with the situation in Ukraine showing minimal signs of de-escalation, which is concerning.

While Trump has made large claims about resolving conflicts there, it’s uncertain how things will unfold, but we must remain vigilant regarding these escalating tensions.

SIMON BROWN: You’ve raised an important point. Uncertainty is indeed a constant factor, and regrettably, it seems that the situation in Ukraine will endure for a while.

Thank you for your insights, Bastian Teichgreeber, Chief Investment Officer at Prescient Investment Management. I appreciate your time.

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