Good morning, especially to the New York Yankees. Enjoy your very much-deserved break.
Last week, as Washington lurched into a shutdown, a trade pact that served for decades as the cornerstone of U.S.–Africa commerce was left to wither, leaving countries across the continent more dependent on their new ties with Beijing. That’s in focus today – plus, the reason American farmers haven’t sold a single soybean to their largest market.
Up first
In the news
Trade: Prime Minister Mark Carney said in a speech last night that Canada will have bilateral deals with the U.S. alongside the continental free trade agreement.
Climate: Carbon-removal startup Deep Sky Corp. plans to build a $500-million direct-air-capture plant in southwestern Manitoba, one of the world’s largest facilities designed to counteract the buildup of CO2 in the atmosphere.
Mining: Teck Resources Ltd. has cut its production forecast yet again at its Quebrada Blanca copper mine as it continues to struggle with engineering problems at the high-altitude operation in Chile.
On our radar
- In a speech to the Canadian Club in Toronto, Innovation Minister Mélanie Joly will talk about what the government is doing to protect the Canadian economy.
- Senior Deputy Governor Carolyn Rogers delivers a speech on productivity and competition.
- U.S. Federal Reserve chief Jerome Powell gives welcoming remarks at a community-bank conference in Washington.
- Earnings include Canadian clothing retailer Aritzia, PepsiCo, Delta Air Lines and Levi Strauss.
At Mayfair Plaza in Mikocheni, a neighbourhood in Dar es Salaam, Tanzania, many of the shops are owned by Chinese businesspeople.Imani Nsamila/The Globe and Mail
In focus
The next front in the U.S.-China trade fight
When the clock ran out on Sept. 30, Washington shut down. At the same moment, a trade pact that defined U.S.–Africa commerce for a generation was allowed to expire.
For the Trump administration – unmoved by months of appeals from African leaders and U.S. trade groups – the lapse reflects a continuation of protectionist policies that have reshaped global trade.
But for China, which has increased its presence across Africa in recent years by financing new infrastructure, deepening political ties and forging tighter military alliances, it marks another opportunity to step in where the U.S. is stepping back.
The billion-dollar stakes, and the important ones
The agreement has supported trade of about US$10-billion annually, sustaining hundreds of thousands of jobs across 32 African countries, from the garment factories of Kenya and Lesotho to the auto assembly plants of South Africa.
In the U.S., too, economists have warned that allowing the deal to expire could lead to 300,000 lost jobs, while also disrupting supply chains and causing price increases.
Even if those are high stakes, they understate the broader significance of having strong trade allies in Africa. The continent’s fast-growing population, mineral reserves and expanding infrastructure make it one of the last major frontiers for trade, manufacturing and investment. For any major power – China, the U.S., or those in Europe and the Gulf – deeper ties in Africa mean access to both the resources and the influence that shape the next phase of global growth.
But with shrinking access to American markets, African countries are finding in Beijing a partner more than willing to open access to their wares. In June, two months after some countries had been hit by the most severe penalties under Donald Trump’s initial trade plan, Beijing announced plans to eliminate all tariffs on imports from nearly every African country.
In a joint statement that didn’t mention Trump, Chinese and African leaders criticized “protectionism and economic bullying” and pledged to resist the pressure for unilateral trade concessions.
“China highly commends African countries’ commitment to the basic principles of sovereignty, equality and justice, and to upholding a common position in the face of external pressure,” the statement said. “We resolutely oppose any party reaching a deal of compromise at the expense of the interests of other countries.”
Trump has alienated many Africans with his tariff policies, but the U.S. President has made decisions that have disproportionately hurt the continent, including travel bans, migration restrictions and foreign-aid cuts, Geoffrey York writes.
“While the U.S. has been damaging its relations with African countries on multiple fronts, China has been assiduously cultivating those same countries with trade, investment and financing deals.”
Chinese President Xi Jinping and Egyptian President Abdel Fattah el-Sisi review the honour guard at the Great Hall of the People in Beijing, in May, 2024.POOL/Reuters
Egypt, a new beneficiary of Beijing’s zero-tariff policy on imports from Africa, has been tilting away from the American sphere of influence for about a decade. That shift is picking up speed, Eric Reguly reports. Officials in Cairo cite the U.S. government’s unwillingness to allow the sale of American-made F-35 fighter jets.
“We made a mistake putting all our eggs in the U.S. basket,” Aly El-Hefny, a former deputy foreign minister and ambassador to China, told The Globe. “It is our right and duty to diversify. We have a strategic relationship with the U.S., but when the U.S. says no to [the sale to Egypt] of armaments, we go to others.”
The diversification plan seems to have benefited Beijing most, Reguly writes, as Chinese capital and construction firms take a leading role in Egypt’s factories, ports and infrastructure – part of a broader web of projects extending across Africa.
As of July, 53 of 54 African countries were signatories of China’s Belt and Road Initiative, a strategy to expand its reach through trade, infrastructure and finance. For developing countries in need, particularly those with the resources China wants, funding from Beijing can be a lifeline.
The view from space
Over the past 20 years, China has rapidly become the biggest trading partner of most African countries and one of the most important investors. Its construction companies have built highways, ports, railways, soccer stadiums, presidential palaces and government offices.
In February, Reuters reported China had also forged nearly two-dozen pacts with African nations in its bid to surpass the U.S. in outer space. The infrastructure in developing countries is helping China create a “global surveillance network,” a former U.S. intelligence officer told the news agency. “China has democratized space to enhance its authoritarian capabilities ... and it’s doing so very effectively.”
It’s little wonder, then – if also a little ironic – that the U.S. President is keen to advance the Golden Dome he again highlighted in meetings this week with Prime Minister Mark Carney. The system would link existing U.S. missile defences with new assets in outer space, designed to protect North America from growing threats such as China.
Charted
A bean goes bust
Chinese buyers of U.S. soybeans have vanished in one of the most dramatic retaliatory steps taken by Beijing since the escalation of trade-war hostilities that followed Trump’s return to the White House. The U.S. has not yet made a single sale to China from this year’s soybean crop, Nathan VanderKlippe reports.
Bookmarked
On our reading list
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Morning update
Global markets took a breather and searched for direction after an AI-related tech rally yesterday.
Wall Street futures were little changed while TSX futures inched higher.
Overseas, the pan-European STOXX 600 was down 0.21 per cent in morning trading. Britain’s FTSE 100 declined 0.43 per cent, Germany’s DAX climbed 0.31 per cent and France’s CAC 40 advanced 0.16 per cent.
In Asia, Japan’s Nikkei closed 1.77 per cent higher, while Hong Kong’s Hang Seng slid 0.29 per cent.
The Canadian dollar traded at 71.69 U.S. cents.