South Africa is heading for serious trouble

South Africa faces some of the highest tariffs on its exports to the United States and, without a trade deal in sight, is set to take a significant knock to its economic growth for 2025 and beyond. 

This is also expected to significantly impact employment in the coming years, exacerbating the country’s unemployment crisis. 

The Reserve Bank laid bare the consequences of the government’s inability to secure a trade deal with the United States in its latest Monetary Policy Review. 

Its data shows that South Africa will be one of the most affected countries by the United States’ new tariff regime, due to it being a small, open economy. 

On 7 August 2025, the United States imposed a 30% import tariff on most of South Africa’s exports, effectively ending the country’s preferential access under the African Growth and Opportunity Act (AGOA). 

The Reserve Bank said that around two-thirds of South Africa’s exports to the United States are now subject to tariffs, raising the commercial viability of entire industries and the potential for job losses. 

While not the largest, the United States is a significant trading partner for South Africa, consuming 7.7% of all exports. 

Crucially, South Africa runs a trade surplus with the United States, making it a vital source of foreign exchange earnings and difficult to replace. 

Some sectors, such as mining, have largely avoided the worst impact of the tariffs. However, these exports only make up around 60% of exports to the United States. 

Furthermore, some key mining subsectors, such as iron ore, aluminium, and copper products, do have tariffs levied on their import into the United States. 

Most importantly for employment and overall economic activity are the tariffs levied on the export of manufactured goods to the United States. 

The United States is South Africa’s thirt-largest export market for vehicles and parts, with exports worth R35 billion in 2024. 

The 25% tariff levied on this industry is higher than that of many of South Africa’s competitors and will sharply reduce its competitiveness in the US market. 

This threatens output and the viability of a sector that anchors South Africa’s broader manufacturing base, which employs hundreds of thousands of individuals, the Reserve Bank warned.

A similar story is playing out regarding agricultural exports to the United States, with these products facing a 30% tariff. This is far higher than the 10% tariff on exports from South Africa’s largest competitors in South America. 

The sectors heavily affected by US tariffs can be seen in the graph below from the Reserve Bank, followed by a table outlining the respective tariffs on these industries. 

Slower growth and job losses

The Reserve Bank’s modelling indicates that the tariffs could reduce South Africa’s economic growth by 0.4 percentage points in the coming year. 

While this seems small, considering the consensus forecast of 1.2% GDP growth for 2026, the tariffs will erode a substantial share of the country’s growth. 

This has dire consequences for employment and the country’s fiscal ratios, with debt-to-GDP likely to rise as interest payments grow faster than the economy. 

The Reserve Bank expects around 40,000 jobs to be lost throughout 2026 if the tariffs are maintained at the current level. An estimated 22,000 jobs will be lost as a direct consequence of the tariffs. 

However, the real issue for South Africa is the knock-on effects of tariffs on some of its major trading partners, particularly China. 

The Reserve Bank noted that tariffs are expected to disrupt global supply chains and disrupt the prices of key exports, presenting additional impact channels. 

If elevated tariffs are sustained on other major global economies, their demand for South African exports is expected to take a hit. 

This will result in additional job losses and increased inflation from a weaker rand. As the largest consumer of South African exports, Chinese economic growth is particularly crucial in this regard. 

The Reserve Bank also cautioned against the belief that South Africa can relatively find alternative markets for its exports. 

This may offer some relief, but the low competitiveness of South African producers and the subdued growth in trading-partner economies suggest minimal upside. 

Overall, the Reserve Bank said the South African economy faces modest macroeconomic effects from US tariffs, but sectoral impacts are likely to be significant. These impacts can be seen in the graphs below.