U.S. President Donald Trump has announced that the United States will halt aid to South Africa over its land expropriation policies, sparking a nearly 2% drop in the South African rand against the dollar in early Asia trading. Trump made the announcement on Sunday evening, stating that "certain classes of people" in South Africa were being treated "very badly" without providing evidence.

The United States allocated nearly $440 million in assistance to South Africa in 2023, according to the most recent U.S. government data. This amount holds significance even for Africa's most industrialized economy. Trump's comments come less than two weeks after South African President Cyril Ramaphosa signed a new law making it easier for the state to expropriate land in the public interest, requiring only equitable compensation.

The legislation seeks to address racial disparities in land ownership that have persisted since the end of apartheid in 1994. The African National Congress (ANC), South Africa's ruling party, has long advocated for reforms to address racially skewed land ownership, a legacy of colonialism and White-minority rule.

Trump's comments have sparked concerns about the potential economic implications of his decision. South Africa is set to host key global discussions this year as the current G-20 chair, with Trump expected to attend if he returns to the U.S. presidency. Notably, his top billionaire supporter, Elon Musk, was born in the country.

This is not the first time Trump has threatened South Africa with economic consequences. In December, he warned of a 100% tariff on BRICS nations—including South Africa—if they moved away from the U.S. dollar. The move has raised questions about the future of U.S.-South Africa relations and the potential impact on the African economy.

Experts have warned that Trump's decision could have far-reaching consequences for South Africa's economy, which is already struggling with high unemployment and slow growth. The country is heavily reliant on foreign aid, and a cut in U.S. assistance could exacerbate its economic woes.

The move has also sparked debate about the role of foreign aid in promoting economic development in Africa. While some argue that foreign aid is essential for supporting economic growth and development, others contend that it can create dependency and undermine local initiatives.

As the situation unfolds, it remains to be seen how South Africa will respond to Trump's decision and what the long-term implications will be for the country's economy and its relations with the United States.