Sudan Conflict Deals New Blow to Stagnant Economy

Sudanese residents shop in a bazaar in Khartoum, Sudan, May 4, 2019. REUTERS/Umit Bektas/File Photo
Sudanese residents shop in a bazaar in Khartoum, Sudan, May 4, 2019. REUTERS/Umit Bektas/File Photo
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Sudan Conflict Deals New Blow to Stagnant Economy

Sudanese residents shop in a bazaar in Khartoum, Sudan, May 4, 2019. REUTERS/Umit Bektas/File Photo
Sudanese residents shop in a bazaar in Khartoum, Sudan, May 4, 2019. REUTERS/Umit Bektas/File Photo

The conflict shaking Sudan has dealt a crippling blow to the heart of the country's economy in the capital Khartoum, as well as disrupting internal trade routes, threatening imports and triggering a cash crunch.

Across swathes of the capital factories, banks, shops and markets have been looted or damaged, power and water supplies have been failing, and residents have reported steep price rises and shortages of basic goods.

Even before the fighting between military factions broke out on April 15 Sudan's economy had been in deep stagnation following a crisis stretching back to the last years of Omar al-Bashir's rule and turmoil after his overthrow in 2019, Reuters said.

Tens of thousands have now fled the violence in Khartoum and its sister cities of Bahri and Omdurman, while millions more have sheltered at home as shelling and air strikes rattle across neighborhoods.

Transport of goods and people has slowed as troops and sometimes gangs roam the streets. Telecom networks have become unreliable and some say they have begun rationing food and water.

"We are afraid, and we are suffering from high prices, shortages, and lack of salaries. This is a war on the citizen," said Ismail Elhassan, an employee at one Khartoum business.

Sudan, already an important exporter of gum arabic, sesame, peanuts, and livestock, has the potential to be a major agricultural and livestock exporter and logistics hub.

But the economy has been held back by decades of sanctions and international isolation, as well as deep corruption. Most Sudanese have struggled with years of rampant inflation, sharp currency devaluations and sliding living standards. About a third of the 46 million population depends on humanitarian aid.

NO DRIVERS

The conflict has hampered trade flows in and out of the East African nation, since banking and customs procedures are centralized in Khartoum. While the country's main port on the Red Sea is operating, at least one big shipping company, Maersk, says it has stopped taking bookings until further notice.

Imports of wheat, key to Sudan's food security, are becoming more difficult, said one Khartoum-based trader. Imports of white goods such as refrigerators across the land border with Egypt, where tens of thousands of Sudanese have fled northwards, have also slowed, said Federation of Egyptian Chambers of Commerce secretary-general Alaa Ezz.

Michel Sidhom, a supply chain manager at a trading company operating in Egypt and Sudan, said its business in Sudan had "completely stopped" as exports of Egyptian fertilizers and flour, typically about 10,000 tons per month each, were halted.

Egypt, Sudan's second biggest destination for livestock, a key export, said it is looking to diversify its sources as a result of the unrest.

Sidhom says his company's traders in Sudan have left Khartoum, and no drivers are willing to risk transporting their goods to the capital city.

"They shut down and left Khartoum until further notice. Whoever stays in Khartoum stays in a battlefield," he said.

SCARCITY, HIGH PRICES

Shortages of items such as flour and vegetables have been reported in Khartoum along with price hikes. Long queues form in front of bakeries and supermarkets in the capital.

The price of one kilogram of lamb has jumped nearly 30% to 4,500 pounds ($7.52), according to a Reuters reporter, while the price of a kilogram of tomatoes doubled to 1,000 pounds ($1.67).

A supermarket owner in Omdurman blamed the inflation on soaring black market fuel prices. A gallon of scarce fuel can now cost as much as 40,000 pounds ($67), up from 2,000 pounds ($3.34).

Even in places where fighting has abated demand is low, said one Omdurman butcher. "Everyone's left," he said.

Sudan's pound has lost about 600% against the dollar since 2018, prompting many to save money in dollars.

Traders in Khartoum face a cash crunch, and people are increasingly dependent on an electronic wallet app known as Bankak, which often suffers outages, to pay bills.

The black market has become distorted, as relatives abroad seek to sell dollars for Bankak transfers, while those in the country seek dollars for safe keeping.

Currency traders offer dollars at rates as high as 700 pounds ($1.17), while buying at as little as 300 pounds ($0.5014), with prices varying widely as transport and communication becomes more difficult.

Sudan's central bank on Sunday said banks outside the capital were carrying out withdrawal and deposit transactions. Within Khartoum, the army and RSF have accused each other of looting banks. The head of one Khartoum bank said he was trying to temporarily move the bank's headquarters outside the capital.

Another executive said that in years of economic reforms, coups, and protests, "this is the biggest challenge to face the banking system, and threatens an almost complete shutdown," he said.

In the city of Atbara, north-east of Khartoum, crowds of people were seen outside of banks, some of which had imposed withdrawal limits.

"My cash has run out because I haven't received my salary and the banking apps don't work," said Elhassan, speaking from Khartoum.



Trump’s Tariff Push Is a Race against Time, and Potential Voter Backlash

Oranges are sold at a store in Annapolis, Maryland, on April 4, 2025. (AFP)
Oranges are sold at a store in Annapolis, Maryland, on April 4, 2025. (AFP)
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Trump’s Tariff Push Is a Race against Time, and Potential Voter Backlash

Oranges are sold at a store in Annapolis, Maryland, on April 4, 2025. (AFP)
Oranges are sold at a store in Annapolis, Maryland, on April 4, 2025. (AFP)

President Donald Trump's expansive new tariffs reverse a decades-long global trend of lower trade barriers and are likely, economists say, to raise prices for Americans by thousands of dollars each year while sharply slowing the US economy.

The White House is gambling that other countries will also suffer enough pain that they will open up their economies to more American exports, leading to negotiations that would reduce the tariffs imposed Wednesday.

Or, the White House hopes, companies will reverse their moves toward global supply chains and bring more production to the United States to avoid higher import taxes.

How will Americans react? But a key question for the Trump administration will be how Americans react to the tariffs. If prices rise noticeably and jobs are lost, voters could turn against the duties and make it harder to keep them in place for the time needed to encourage companies to return to the US.

The Yale Budget Lab estimates the Trump administration's tariffs would cost the average household $3,800 in higher prices this year. That includes the 10% universal tariff plus much higher tariffs on about 60 countries announced Wednesday, as well as previous import taxes on steel, aluminum and cars. Inflation could top 4% this year, from 2.8% currently, while the economy may barely grow, according to estimates by Nationwide Financial.

Investors turned thumbs-down on the new duties Thursday, with the S&P 500 index dropping 4.8% at the close of trading, its worst day since the pandemic. The Dow Jones Industrial Average plunged more than 1,600 points.

Still, Trump was upbeat Thursday when asked about the stock market drop.

"I think it’s going very well," he said. "We have an operation, like when a patient gets operated on and it’s a big thing. I said this would exactly be the way it is."

The average US tariff could rise to nearly 25% when the tariffs are fully implemented April 9, economists estimate, higher than in more than a century, and higher than the 1930 Smoot-Hawley tariffs that are widely blamed for worsening the Great Depression.

"The president just announced the de facto separation of the US economy from the global economy," said Mary Lovely, senior fellow at the Peterson Institute for International Economics. "The stage is set for higher prices and slower growth over the long term."

Commerce Secretary Howard Lutnick argued the policies will help open markets overseas for US exports.

"I expect most countries to start to really examine their trade policy towards the United States of America, and stop picking on us," he said on CNBC Thursday. "This is the reordering of fair trade."

Bob Lehmann, 73, who stopped by a Best Buy in Portland, Oregon, Wednesday opposed the tariffs. "They’re going to raise prices and cause people to pay more for daily living," he said.

Mathew Hall, a 64-year-old paint contractor, called the tariffs a "great idea" and said potential price increases in the short term were worth it.

"I believe in the long term, it’s going to be good," he said, adding that he felt the US had been taken advantage of.

But a former trade official from Trump’s first term, speaking on condition of anonymity to talk candidly about the impact, suggested that Americans, including those who voted for Trump, may have difficulty accepting the stiff duties.

Americans "have never faced tariffs like this," the former official said Thursday. "The downstream impact on clothing and shoe stores, it’s going to be pretty significant. So we’ll have to see how the Trump voters view this ... and how long their support for these policies goes."

On Thursday, automaker Stellantis, which owns the Jeep, Citroen and Ram brands, said it would temporarily halt production at plants in Canada and Mexico in response to Trump's 25% tax on imported cars. The reduced output means the company is temporarily laying off 900 workers at plants in Michigan and Indiana.

Some exporters overseas may cut their prices to offset some of the tariffs, and US retailers could eat some of the cost as well. But most economists expect much of the tariffs to bring higher prices.

The tariffs will hit many Asian countries hard, with duties on Vietnamese imports rising to 46% and on Indonesia to 32%. Tariffs on some Chinese imports will be as high as 79%. Those three countries are the top sources of US shoe imports, with Nike making about half its shoes last year and one-third of its clothes in Vietnam.

The Yale Budget Lab estimates all Trump’s tariffs this year will push clothing prices 17% higher.

On Thursday, the Home Furnishings Association, which represents more than 13,000 US furniture stores, predicted the tariffs will increase prices between 10% and 46%. Vietnam and China are the top furniture exporters to the US.

It said manufacturers in Asia are offsetting some of the costs by discounting their products and lowering ocean freight rates, but that won't be enough to avoid price hikes. Even domestically made furniture often relies on imported components.

"While many in the industry support the long-term goal of reshoring manufacturing, the reality is that it will take at least a decade to scale domestic production," Home Furnishings Association CEO Shannon Williams said in a statement. "Permitting, training a skilled workforce and managing the higher costs of US manufacturing are significant hurdles."

At Gethsemane Garden Center in Chicago, there are Canadian-grown tulip, daffodil and hyacinth bulbs, though only about 5% of center plants are imported. Thousands of lemon cypress trees from Canada are sold year-round and Canadian mums are sold in the fall.

Regas Chefas, whose family has owned Gethsemane for decades, says all the tariffs won't be passed onto customers.

"We’re going to absorb some of the increase. The growers will absorb some of the increases and then the customers will pay a little bit higher price," he said.

The Consumer Brands Association, which represents Coca-Cola, General Mills, Nestle, Tyson and Del Monte as well as Procter & Gamble and Colgate-Palmolive, said its companies already make the majority of their goods in the US.

But there are critical ingredients and inputs — like wood pulp for toilet paper — that are imported because of scarce domestic availability. Cinnamon is harvested from trees that can’t survive in the US. Domestic production of coffee and cocoa is also limited.

"We encourage President Trump and his trade advisers to fine-tune their approach and exempt key ingredients and inputs in order to protect manufacturing jobs and prevent unnecessary inflation at the grocery store," said Tom Madrecki, the association’s vice president of supply chain resiliency.

Outside a Tractor Supply south of Denver, two family members on opposite sides of the political spectrum debated the tariffs.

Chris Theisen, a 62-year-old Republican, said: "I feel a good change coming on, I feel it’s going to be hard, but you don’t go to the gym and walk away and say, ’God, I feel great."

Nayen Shakya, a Democrat and Theisen’s great nephew, said higher prices are already a hardship. At the restaurant where he works, menu prices have been raised to account for higher ingredient costs.

"It’s really easy sometimes to say some things in a vague way that everyone can agree with that is definitely more complex under the surface," said Shakya. "The burden of the increased prices is already going to the consumer."

Listening to his nephew, Theisen added: "I understand this side of it, too."

"I ain’t got no crystal ball. I hope it works out good."