No mercy for South Africa

The United States White House has confirmed that South African exports will be slapped with a 30% tariff on 7 August 2025, as the local government failed to seal a better deal for the country before the 1 August deadline.

United States President Donald Trump has followed through on his threats to implement wide-reaching tariffs on countries across the world.

This started with his ‘Liberation Day’ announcements on 2 April 2025, where he outlined all the countries set to be hit with higher tariffs.

However, following backlash after this announcement, the US President decided to pause these tariffs for 90 days to allow affected countries to broker a deal.

Since this announcement, Trump’s tariff threats have waned and waxed, with the latest update threatening 30% tariffs on South African goods exported to the United States, with other select countries also slapped with higher tariffs.

On Monday, 7 July, Trump unveiled a wave of letters that threatened to impose higher duties on American trading partners while signalling that he’s open to discussions on the increased tariffs until at least 1 August.

Therefore, South Africa and many other countries worldwide have been in talks with the United States to negotiate a softer tariff policy.

Following Trump’s letters in early July, President Cyril Ramaphosa said there is a prospect that the United States may lower the planned 30% tariff on local goods, saying he is in ongoing talks with Washington.

“South Africa will continue with its diplomatic efforts towards a more balanced and mutually beneficial trade relationship with the US,” Ramaphosa said in a statement.

“We welcome the commitment by the US government that the 30% tariff is subject to modification at the conclusion of our negotiations with the US.”

However, the 1 August deadline has now come and gone, with the White House confirming in an Executive Order on Friday that South Africa will receive a 30% tariff.

Risks to South Africa

These tariffs present a significant risk to South Africa’s economy, with the automotive and agriculture industries set to be hit the hardest.

South Africa’s automotive exports to the United States have already plummeted by 82% in the first half of 2025 compared to the same period last year.

This is primarily attributable to the imposition of 25% tariffs on all automotive components imported into the United States.

Reserve Bank Governor Lesetja Kganyago has warned that the 30% tariff could threaten around 100,000 jobs in the country.

He said that not all motor vehicle manufacturers in South Africa will be significantly impacted by the tariffs, but manufacturers with a significant exposure to the United States will.

In addition, Kganyago highlighted the potential impact on agriculture, stating that the effect of US tariffs on this industry would be “devastating”.

The agriculture sector is a significant exporter of goods in South Africa. According to Trade Map, agricultural exports reached a new record of $13.7 billion in 2024, up 3% from the previous year.

In its latest Monetary Policy Statement, the central bank also cut its forecast for South Africa’s economic growth in 2025, citing the expected impact of United States tariffs.

Several economists have also warned of the devastating impact these tariffs will have on South Africa’s economy, considering the United States is South Africa’s second-largest trading partner.

As a small, open economy, South Africa is heavily reliant on exports, especially for its commodities.

NWU Business School Professor Raymond Parsons explained that the aggressive US tariff policy creates a fragmented world trading system, which further exacerbates economic uncertainty, disrupts supply chains, and hampers economic activity.

However, while there is a great deal of fear psychology about what this means going forward, South Africa is not without remedies.

“As a small open economy, it remains essential that bilateral negotiations must continue to stabilise and consolidate future US-SA investment and trade relations,” he said. 

“And collaboration between government and the private sector must continue to accelerate the steady identification of alternative markets, for which South Africa must remain globally competitive.”

Therefore, Parsons argued it is essential for South Africa to speedily implement growth-friendly policies that build economic buffers and reduce costs for doing business.

This will enable South Africa to successfully deal with any global setbacks, including aggressive tariff policies, and build its economy.