Finance Minister Enoch Godongwana’s warning about the United States

Finance Minister Enoch Godongwana warned that life will become difficult for South Africa if it continues to disagree with the United States. 

Godongwana issued this warning at a post-Budget Speech event hosted by Momentum, where the minister discussed the National Treasury’s plans to address the government’s deteriorating finances. 

The minister’s third Budget Speech for the coming fiscal year managed to be relatively uneventful, with political support garnered before it was presented to Parliament. 

This was done by Godongwana, confirming the reversal of the planned VAT hike and committing to finding ways to improve the effectiveness of government spending. 

The National Treasury has said that it has found tens of billions of rands in the Budget that could be saved by more efficient spending and reallocations. 

These initiatives will be implemented in the next Budget in the hope of avoiding any further tax increases to cover the government’s deficit. 

However, it did reveal South Africa’s dismal financial situation, with government debt expected to peak at higher levels than previously and additional money spent on servicing this debt. 

Currently, around 22 cents of every R1 collected in tax by SARS goes towards servicing the government’s debt burden, crowding out spending in other areas. 

While the Budget is arguably the most important event of the year for South Africa, it was somewhat overshadowed by the meeting between President Cyril Ramaphosa and US President Donald Trump. 

“Let me start by saying that the meeting in Washington yesterday was very significant,” Godongwana said at the post-Budget event. 

“Some would say that two important events happened yesterday, and I am angry because the other one crowded mine out,” he joked. 

Godongwana explained that relations with the United States, as the largest economy in the world and the deepest capital markets, are vital for any country. 

He also said that poor relations with the United States threaten South Africa’s relationships with every other country due to its outsized influence. 

“If you disagree with the Americans, life becomes difficult in dealing with anybody. No one wants to touch you,” Godongwana said. 

“This is a fundamental problem. They can make it very difficult for you to engage with other countries and trade freely.” 

Godongwana recounted a story of when the United States asked South Africa not to buy any oil from Russia but conceded to allow the country to buy a small amount. 

When South Africa wanted to ship the oil to the country, it found that no company wanted to transport it or insure it. 

“The significance of that meeting is not just between us and the Americans. It has implications for market sentiment across the globe for South Africa.” 

Ramaphosa in the lion’s den

Some of President Ramaphosa’s worst fears about a meeting with his American counterparts came true on 21 May. 

US President Trump rejected many of Ramaphosa’s arguments that there is only a small minority of South Africans calling for expropriation without compensation. 

Ramaphosa had initially struck an upbeat tone at the meeting, calling for a reset in ties between the two countries and to advance trade.

He even offered Trump a book about golf in South Africa — he said it weighed 14 kilograms — and said he had started practising the sport.

However, it quickly devolved into a heated exchange between the two sides after Trump showed a video to back up his claims that White farmers are being targeted.

Presidency spokesman Vincent Magwenya referred to the meeting as an ambush due to the programme being changed at the last minute. 

“From here onwards, we can now deal with substantive issues, because they’ve made the point, they will feel good they’ve made the point, and we can now focus on what needs to be done to take the relationship forward,” Magwenya told Bloomberg.

South Africa’s relations with the United States have deteriorated rapidly since Donald Trump was elected to the US Presidency in November 2024. 

He has repeatedly singled out South Africa for criticism, saying that a lot of bad things are happening in the country. 

This has translated into trade policy, with South Africa being hit with a 30% reciprocal tariff based on the country’s trade surplus with the United States. 

Trump has since walked back the higher reciprocal tariffs, implementing a 90-day pause for negotiations to occur. 

The 10% across-the-board tariff, which effectively nullifies any benefit of the African Growth and Opportunity Act (AGOA), remains in effect.

The reciprocal tariffs were in addition to the 10% across-the-board tariff that Trump imposed on all imports into the United States. 

Trump has since walked back the higher reciprocal tariffs, implementing a 90-day pause for negotiations to occur. 

The 10% across-the-board tariff, which effectively nullifies any benefit of the African Growth and Opportunity Act (AGOA), remains in effect.