South Africa, like other countries around the world, was offered a reprieve when the US delayed the implementation of punitive tariffs by 90 days but the negative effect of Washington’s escalating trade war with China will still be felt on local shores.<\/p>\n
On 9 April, the day a 30% tariff on South Africa was set to take effect, President Donald Trump announced a three-month pause on all reciprocal tariffs on several countries he accused of having taken advantage of the US for years but hiked those on China which he said had shown a lack of respect by retaliating while other affected nations had sought to negotiate.<\/p>\n
China and the US are the first and second biggest single country recipients of South African exports, so the economic toll of a trade war would be felt here. <\/p>\n
According to the South African Revenue Service, China accounted for 9.9% of South Africa\u2019s exports in February<\/a>, followed by the US at 8.6%, Germany at 6.4%, Mozambique at 4.8% and Japan at 4.4%.<\/p>\n Other than the indirect effects of the onslaught against its biggest trading partner, the overall slowdown in the global economy that is now a near certainty will also be felt, putting pressure on consumers, said Maarten Ackerman, the chief economist at Citadel.<\/p>\n \u201cWe\u2019re taking pain from that point of view and not specifically from the tariffs that the US is imposing on South Africa \u2026 There are definitely going to be some challenges,\u201d Ackerman said.<\/p>\n He noted that a 30% tariff \u2014 should Trump reinstate it after 90 days \u2014 would not necessarily mean the US would stop buying South African goods, but that they would be more expensive for them, probably leading to a drop in demand.<\/p>\n \u201cAt the same time, it might create opportunities for us to replace that export share trading with other countries, so the direct impact on the economy and also on the job market should, and can, be weathered in terms of looking for other trading opportunities,\u201d Ackerman added.<\/p>\n Tariffs would also effectively nullify the preferential access to US markets that many sub-Saharan Africa countries have enjoyed under the Africa Growth and Opportunity Act (Agoa), as the departments of trade and international relations said in a recent joint statement<\/a>.<\/p>\n In any case, Agoa expires in September, and its chances for renewal are slim as Trump pursues his \u201cAmerica first\u201d agenda.<\/p>\n According to the government, the US represented 7.45% of South Africa\u2019s total exports in 2024, while South Africa accounted for only 0.4% of US total imports. <\/p>\n \u201cAs such, South Africa does not constitute a threat to the US and, where there is a trade imbalance in favour of South Africa, it is mainly on agriculture products which are counter-cyclical and on minerals which are inputs in US industries,\u201d the two departments said in their statement.<\/p>\n Last year, South Africa\u2019s total mineral and precious metal exports to the US amounted to R65.3 billion, with platinum group metals accounting for 76.3% of the total, according to the Minerals Council of South Africa<\/a>.<\/p>\n Platinum group metals, chrome, manganese and other minerals were exempted from the US import tariffs, but iron ore, diamonds, slag and precious metal jewellery would be taxed. <\/p>\n The minerals council said business and consumer sentiment, investment and overall growth would be dim amid the turmoil, adding that there should be a greater focus on the knock-on effects of the tariffs on other countries, especially China. <\/p>\n \u201cThere are a couple of important minerals for South Africa, where China is our most important customer [including iron ore and chrome]. So, indirectly, anything that the US does that has a bad impact on the Chinese economy and also our other trading partners, in theory, may dampen the demand for South African exports,\u201d its chief economist Hugo Pienaar told the Mail & Guardian.<\/em><\/p>\n The US is South Africa\u2019s second-largest component export destination, after Germany, and industry experts said the US was likely to bear the brunt of more expensive vehicles. <\/p>\n \u201cThe immediate impact on direct component exports to the US is most likely to be felt in the US rather than South Africa. It can take 12 to 15 months for US importers to change their supply of components,\u201d said Renai Moothilal, chief executive of the National Association of Automotive Component and Allied Manufacturers.<\/p>\n \u201cThis means, for at least the short-term, the US will need to absorb the price increase, ultimately causing inflation in the US.<\/p>\n \u201cIt\u2019s important to recognise that auto component trade between South Africa and the US is not one-way. The US has a trade surplus in this sector. In 2024, R16 billion of auto components were imported into South Africa from the US versus the R4.3 billion exported there.\u201d<\/p>\n The tariffs would also reduce demand for South African vehicles, leading to lower production, pressure on local component suppliers and job losses across the value chain, warned Mikel Mabasa, the chief executive of the National Association of Automobile Manufacturers of South Africa.<\/p>\n He noted that in 2024, 25 553 vehicles \u2014 6.5% of South Africa\u2019s total exports \u2014 were sold to the US, up from 20 910 in 2023, but these were now at risk due to price competitiveness issues.<\/p>\n \u201cThe tariff announcement has created uncertainty in trade relations and may impact ongoing and future export orders to the US,\u201d Mabasa said. <\/p>\n South Africa\u2019s farmers will probably have to look for alternative markets in Africa, Asia, the EU and among fellow Brics+ members for their produce in the face of the tariffs, industry experts said.<\/a><\/p>\n On a broader scale, investments across the agricultural value chain \u2014 from farmers to distributors, food processors and manufacturers \u2014 will feel the strain, said Mmatlou Kalaba, a senior analyst at the Bureau for Food and Agricultural Policy.<\/p>\n \u201cThere are investments that were made towards canning these products, bottling the wines and the packaging \u2026 If we are unable to continue exporting to the US, we will start seeing the effect on the chain, on the employment in those areas, all the way up to the farm,\u201d Kalaba said.<\/p>\n