South Africa continues to press the US for trade deal, says Parks Tau
Image: GCIS
South Africa continued to work tirelessly discussing with its counterparts in the US to keep the trade route open and having submitted the Framework Deal in May, South Africa has signed a condition precedent document with the office of the US Trade Representative, a precursor to finalisation of the negotiations, Minister of Trade, Industry and Competition Parks Tau said in his budget vote.
Tau said the collective work of business, organised labour and civil society, in engaging the US Congress is also a key lever in South Africa's toolkit in its approach to ensuring the continued inclusion of South Africa in the Africa Growth and Opportunity Act and to respond to the recently proposed US-South Africa Bilateral Relations Review Act.
"Our active engagements with Asia are significantly bearing fruit. We have advanced conversations with China on Green Industrialisation and deepening our industrial supply chains. We have also committed to working with them to beneficiate our critical minerals here at source. This will unlock value in our Special Economic Zones (SEZs) and Industrial Parks as we agree that these dynamic strategic nodes in our country are best placed to drive our reindustrialisation agenda." Tau said.
He said the government was also reinvigorating its relationship with Japan through InvestSA and the Japan External Trade Organisation (JETRO).
As the looming Carbon Border Adjustment Mechanism (CBAM) alone has the potential to create an almost 1% contraction in GDP on the African continent, South Africa remains firm that the multilateral trading system with the World Trade Organisation and the United Nations at their core, must be preserved until all member states are able to reach their developmental goals, he said.
"This is the message we will take to the 14th Ministerial Conference in Cameroon next year. Our announcement on the Clean Trade and Investment Partnership (CTIP) with the EU in March, is to be welcomed by our provinces and municipalities. For one, CTIP will enable us to execute our decarbonisation agenda and maximise the R90 billion facilitation funding that has been initially committed," Tau said.
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Deputy Minister for the Department of Trade, Industry (Dtic) and Competition Zuko Godlimpi said to support and accelerate the participation of black industrialist in the economy, the Industrial Development Corporation (IDC) had in 2025/2026 revised its commitment to a total of R12 billion towards transformation focused funding.
Godlimpi said R7.4bn was earmarked for black industrialists, R3.5bn for women-owned businesses and R1.5bn for youth-led enterprises in efforts aspired to reflect a deliberate strategy to transform the ownership and control of productive assets in the economy.
"In KwaZulu-Natal, the IDC is supporting SME canegrowers and supporting avocado producers link to export markets. In the North West, a second round of funding is being prepared for black grain producers. In the Eastern Cape we are advancing green hydrogen and agro processing through partnership with local industry to respond better to global market conditions," Godlimpi said.
He said other highlights included that in the Free State there was a programme of revitalising the agri infrastructure with the provincial government, in Gauteng through supplier development, business referrals are fueling a strong pipeline for transformative funding, whilst in the Western Cape, there was support for black industrialists in poultry, plastics and solar installations.
"In Limpopo, we have a proposed R50 million farming aggregator funding, which is expected to create 400 jobs. In Mpumalanga, the IDC is backing green hydrogen and biofuels brick making and furniture making, with plans afoot for the establishment of a Special Economic Zone," Godlimpi said.
He said on the part of the Dtic, out of its R11bn, up from R9.6bn in the 2024/2025 year, 35.15% of the total budget goes to business incentives while infrastructure investments are apportioned 10.2% amounting to R5.2bn investment in the incentive programme.
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The agrifood system alone has shrunk by 33.6%. These estimates exclude informal economy losses. My research applies economy-wide models to understand how conflict affects national development. In a recent study, my colleagues and I used this approach to answer the question: what will happen to Sudan's economy and poverty levels if the war continues through 2025? To assess the economic impact of the conflict, we used a Social Accounting Matrix multiplier model. This is a tool that captures how shocks affect different sectors and other agents of the economy, such as firms, government and households. Based on our modelling, the answer is devastating: the conflict could shrink the size of Sudan's economy by over 40% from 2022 levels, plunging millions more into poverty. We modelled two scenarios to capture the potential trajectories of Sudan's economy. The extreme scenario assumes a sharp initial collapse, with a 29.5% contraction in the size of the economy in 2023 and 12.2% in 2024, followed by a 7% decline in 2025, reflecting some stabilisation over time. The moderate scenario, based on World Bank projections, applies a 20.1% contraction in 2023 and a 15.1% drop in 2024, also followed by a 7% reduction in 2025, indicating a slower but more prolonged deterioration. We estimated the annual figures and report only the aggregate impacts through 2025 for clarity. We found that if the conflict endures, the value of Sudan's economy will contract by up to 42% from US$56.3 billion in 2022 (pre-conflict) to US$32.4 billion by the end of 2025. The backbone of livelihoods – agriculture – will be crippled. And the social fabric of the country will continue to fray. 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Daily Maverick
4 hours ago
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With the 1 August deadline upon us and no trade agreement yet, experts agree that relations between South Africa and the US would need a reset and cool heads to negotiate. With hours to go before US President Donald Trump's tariffs are expected to come into effect, South Africa announced 'urgent interventions' to support exporters impacted by the tariffs. 'The Department of Trade, Industry and Competition (DTIC) has announced a set of measures in response to the imminent 30% tariff hike on South African exports to the United States, which comes into effect on 1 August 2025. 'These urgent interventions are part of the DTIC's ongoing commitment to protecting jobs, preserving market access to the United States, and promoting export diversification to alternate markets in Africa, the European Union, Asia, Latin America, and other strategic partners,' Trade and Industry Minister Parks Tau said in a statement on Thursday night, 31 July. This comes hours after Tau told Radio 702 that South Africa was preparing a last-minute 'enhanced' trade proposal in the hope of avoiding Trump's punishing tariffs. Key among the interventions, Tau said, was the establishment of an export support desk, which would serve as a direct point of contact for companies affected by the US tariff hike. 'The desk will provide updates on developments and tailored advisory services to exporters on alternative destinations, guidance on market entry processes, insights into compliance requirements and linkages to South African Embassies and High Commissions abroad,' said Tau. 'This tariff hike poses a direct threat to our export capacity, particularly in strategic sectors such as automotive, agro-processing, steel and chemicals, amongst others. 'We are working with urgency and resolve to implement real, practical interventions that defend jobs and position South Africa competitively in a shifting global landscape. The stakes are high and we must respond decisively to ensure our export industries remain resilient, competitive and globally integrated into diversified markets,' he said. Tau said exporters were encouraged to visit the DTIC website for updates and also to engage directly with the export support desk. At a White House press briefing on Thursday, press secretary Karoline Leavitt reiterated that on 1 August, the reciprocal tariff rates 'will be going into effect'. She said that foreign leaders of countries that did not have deals would be 'hearing from this administration by the midnight deadline tonight'. Leavitt said that Trump would be 'signing an executive order at some point this afternoon or later this evening' imposing new tariff rates. However, she did not rule out the possibility of the Trump administration making deals with countries that still did not have agreements in place, before midnight on Thursday. 'I will never count out the president… I do know foreign leaders are ringing his phone realising this deadline is a real thing for them tomorrow and they are bringing offers to the table,' she said. South Africa is confronting the most critical moment in its fraught relations with the US, staring at exports worth almost $10-billion being exposed to stiff tariffs that risk making these goods uncompetitive. That is the estimated value of South African exports vulnerable to the 30% 'reciprocal' and sectoral import tariffs threatened by the Trump administration. South Africa has been advised to diversify its export destinations urgently – especially to Africa – to reduce its dependency on the US. Nevertheless, the world's largest economy remains critical for now and South African officials have been working frantically to secure an alternative trade deal with the US to avert President Donald Trump's 1 August deadline for imposing hefty tariffs on most countries. However, said Eckart Naumann, independent economist and associate of the Trade Law Centre (Tralac), 'many dozens of countries are also knocking on the door and US trade officials will likely be run off their feet'. Tralac is a non-profit organisation that builds trade-related capacity in Africa. On Thursday, 31 July, Minister of Trade, Industry and Competition Parks Tau told radio station 702: 'We actually spoke to the US last night, both at the level of the embassy and also at the level of the US trade representative. They indicated that even they are unable to confirm what the announcement [on South Africa's tariff rates] would be, and that they would encourage us to resubmit our proposal, possibly an enhanced proposal, to the US government. It would be processed by the White House… At this point, they are unable to say what the final decision would be.' 'Reckless statements' In his statement, Tau said the DA, 'instead of providing constructive support to the efforts made by government', continued to release 'reckless statements which undermine the progress' the department has been making towards the 1 August deadline. 'In a trying moment for South Africa, there still remain those who would seek to sabotage our efforts to resolve this impasse. Despite our tireless efforts, which we have, where possible, communicated consistently on, some segments of our country refuse to be part of the solution. 'Instead of providing constructive support to the efforts made by government, the Democratic Alliance continues to release reckless statements which undermine the progress we have been making towards the 1 August deadline. This is downright irresponsible for a party in the Government of National Unity, and an integral part of the process,' said Tau. Earlier on Thursday, Business Day reported that South Africa was offering the automotive and agricultural sectors alternative markets and possible Treasury-backed tax incentives, part of a two-part contingency plan to keep production lines going if SA was faced with a 30% tariff from Friday. In response, DA spokesperson on finance Mark Burke said this 'new deflection' by Tau is meant 'to make up for his and his party's failed foreign policy pageantry'. 'Instead of securing a trade deal, Tau now expects our Treasury to borrow or tax South Africans more to pay for the costs of the ANC's association of our state with rogue nations like Iran,' said Burke. The chances of South Africa averting or extending the deadline seemed to dim this week when Trump told reporters that he would probably not be attending the G20 Summit in Johannesburg in November 'because I've had a lot of problems with South Africa. They have some very bad policies.' He also posted on his social media site Truth Social: 'The August 1 deadline is the August first deadline – it stands strong and will not be extended. A big day for America!' South Africa has offered a package of concessions, including lowering tariff barriers to US food imports, buying US gas and committing local companies to investing in US mining and recycling. But many analysts fear it will not be enough because it's not so much about economics as it is about politics. Zane Dangor, director-general of the Department of International Relations and Co-operation, told the Kgalema Motlanthe Foundation's winter seminar this week that there was a risk of SA being punished for its domestic policies – particularly black economic empowerment (BEE) – no matter what economic deal it put on the table. Reserve Bank governor Lesetja Kganyago said earlier this month that Trump's tariffs could cause about 100,000 job losses, with the agriculture and automotive sectors hardest hit. Naumann said the US imported goods worth $14.6-billion from South Africa in 2024, according to its own data. However, he noted that about 36% of these exports were exempt from the new tariffs because they were natural resources (mainly platinum group metals, rhodium and gold) that the US needed. This would leave South African exports to the US worth $9.344-billion vulnerable to the potential new tariff rates. Naumann said South Africa's exposure to the US as an export market was relatively limited, with about 7.5% of its total exports going to the US. 'However, in some sectors, South Africa's exposure to the US is quite high,' he said. 'For example, last year, 29% of our boat exports went to the US duty-free under Agoa [the African Growth and Opportunity Act]; 25% of aluminium and articles thereof were exported to the US and are now subject to 50% tariffs; 11% of our auto exports were shipped duty-free to the US and, along with much of the rest of the world, now face a 25% sectoral tariff. 'In contrast, key competitors like the EU, UK and Japan, and indeed Mexico under the US-Mexico-Canada Agreement, have negotiated far more preferential access to the US for their motor vehicle exports.' Naumann noted that the tariffs SA faced were differentiated: there were the 30% 'reciprocal' tariffs, but also sectoral tariffs of 25% on autos and parts; 50% sectoral tariffs on steel and aluminium; an existing 10% general tariff (to be replaced by the reciprocal tariff) and a threatened extra 10% tariff on all BRICS member countries. 'The days of preferential access to the US market are definitely over,' Naumann added. For now, under Agoa, the US was still waiving standard 'most favoured nation' duties – though not the additional ones the Trump administation has added. He thought it doubtful that South Africa – perhaps any country – would remain in Agoa in its current guise after its scheduled expiry on 30 September. 'The intersection of geopolitical, domestic and trade issues best defines the current impasse between South Africa and the US, and a reset is unavoidable,' Tau said in a statement this week. He said SA had decided not to retaliate in terms of the tariffs and awaited the US's response to its proposed framework deal. The deal included South Africa importing 75-100 petajoules of US liquified natural gas for a 10-year period, unlocking $12-billion; giving the US more agricultural market access by simplifying US poultry imports, unlocking about $91-million in trade; being ready to open the South African market for US blueberries; local firms committing to invest $3.3-billion in US industries such as mining and metals recycling; and both governments agreeing to pursue joint investment in critical minerals, pharmaceuticals and agri-machinery. Tralac CEO Trudi Hartzenberg, however, thought pork and poultry seemed a 'tricky' part of the negotiations. Donald MacKay, director of XA Global Trade Advisors, said although the state of the SA-US trade negotiations was very murky, in part because both sides had signed a non-disclosure agreement, he suspected that South Africa would, in fact, be hit with the threatened big 30% tariffs. But he was hoping that the US would give South Africa another reprieve – an extension of the deadline to complete negotiations for a new deal. 'The hardest-hit centres by my estimation are going to be fresh fruit, particularly citrus and table grapes.' But MacKay said probably about half of these products had already been exported this season. 'So, still bad, but … it really means next year's going to be a particularly big problem'. MacKay added: 'The government keeps telling people to find other markets, as if that is really easy to do. For a product like citrus, we already export to over 100 countries. There's just not that many left we can send [citrus] to and certainly none left that will get us the same kind of prices we get in the US. 'Cars, of course, are not included in the 30% tariff, but they've already got their own 25% tariff. We've seen how that looks with Mercedes-Benz at least temporarily closing down its factory,' he added, referring to the company shutting down its manufacturing plant in East London for July, though it was reopened this week. MacKay said South Africa needed 'to get back to basics. We need to get a properly functioning, professional ambassador into the US. I can't even remember the last time we had a properly functioning ambassador.' Tau has been criticised in some quarters for the way he has handled the trade negotiations, but MacKay said because the negotiations had been held behind closed doors, it was impossible to judge. But, he said, he would like the government 'to put some time in with the sectors and the companies most negatively impacted to look at what can be done'. Daniel Bradlow, an economic diplomacy expert at the University of Pretoria and the South African Institute of International Affairs, said: 'The lesson from all of this, not just from South Africa, but from what's happening everywhere, is countries have to learn how to restructure their trade relations to work around the US.' For South Africa and for Africa generally, this meant there was a need to accelerate the implementation of the African Continental Free Trade Agreement (AfCFTA) and other African regional trade arrangements. The institutions that needed to be developed more intensely included regional multilateral financial institutions in Africa such as the Trade and Development Bank and the African Export-Import Bank, which focuses specifically on developing trade for Africa, and several others, Bradlow said. 'And I think South Africa should be looking at: how do we make those more robust and more effective?' Other critical issues to address – which were being tackled in South Africa's G20 – were making Africa's debt more sustainable and how to increase development finance, because that would help to finance the regional infrastructure that is needed to implement the AfCFTA. Bradlow said whatever the outcome of the SA-US trade negotiations – even if the US accepted the Department of Trade, Industry and Competition's package, South Africa would be hit as the US was a big trading partner. It was just a question of how much. He noted that, for starters, a 10% increase was a given as no country had escaped that so far, except on critical minerals, though some countries had managed to lower their reciprocal and sectoral tariff rates. On the auto industry, he said one of the big questions was how the foreign auto producers would react to a tariff increase: 'Would they start shutting down factories?' Like the government, Bradlow also said South Africa and other countries needed to shift trade relations away from the US because, even if a Democrat were to oust Trump in 2028, Democrats might not change the tariffs much – as former president Joe Biden had not changed much of Trump's tariffs in his first term. Naumann noted that the US was South Africa's second-largest export destination by country (7.5% of total exports) and China its first with 11%. Both were overshadowed by the EU, which gets 17% of South African exports and the Southern African Development Community free-trade area. 'But our exports to the US are far more diversified than our exports to China, which are mostly raw materials or resources. That makes the US probably the most important destination as a country, albeit shadowed by the EU as a whole.' A major report on SA-US trade relations just published by Tralac shows the impact of increased US tariffs on South African companies and industries would depend on several factors, including tariff advantage or disadvantage relative to competitors; the seasonality of demand and supply (how responsive demand is to the landed costs of products); and US domestic policies such as local tax breaks on locally produced autos. MP Toby Chance, the DA's spokesperson on trade, industry and competition, said Tau had been slow in realising the danger from Trump's tariffs and in taking action 'both to woo him and explore alternative markets'. He said South Africa had erred in not tackling Trump's 'instinctive negativity' towards the country with better diplomacy, citing the appointment of Ebrahim Rasool as ambassador and Mcebisi Jonas as special envoy to the US. 'I think it is highly likely we will end up on the higher end of the 10% to 30% tariff spectrum, though there could be some sweeteners such as concessions on counter-seasonal fruit, which would help our citrus growers. 'Another glaring omission is the government's ignoring the issue of non-tariff barriers, continually raised by the Trump administration as factors in the negotiations, which are a bar to investment not just by the US but other countries and firms, e.g. BEE, the Employment Equity Act, expropriation without compensation, etc.' Naumann said it was probably unfair to criticise SA's negotiators for the perceived lack of progress. 'We're not first in line for a reasonable deal and apart from years-long neglect and being virtually absent in Washington – and still without an ambassador or interlocutor – politically we're certainly not well favoured by Washington. We shouldn't maintain high hopes of a particularly favourable outcome involving exemptions and a low country tariff rate, as this just doesn't appear to fit the current political narrative.' He thought new tariffs for South Africa would be postponed for further negotiations, but added: 'The US will be careful not to make concessions to South Africa that might undermine dozens of other trade deals being pursued right now.' DM
The Citizen
9 hours ago
- The Citizen
Tau launches urgent support measures for exporters affected by US tariffs
South Africans have been asking for more information on the US tariffs. It seems that there is now some movement at last. Minister of Trade, Industry and Competition (dtic) Parks Tau has announced in a late statement on Thursday that his department is launching urgent measures to support exporters affected by the US tariffs. His statement came after a week of no communication from the dtic, apart from saying negotiations are at a sensitive stage. He lambasted people spreading rumours, saying in a trying moment for South Africa, there remain people who 'would seek to sabotage our efforts to resolve this impasse'. 'Despite our tireless efforts, which we, where possible, communicated consistently, some segments of our country refuse to be a part of the solution. Instead of providing constructive support to the efforts made by government, the Democratic Alliance continues to release reckless statements which undermine the progress we have been making towards the 1 August deadline. 'This is downright irresponsible for a party in the government of national unity and an integral part of the process. We will not, however, be deterred by this.' ALSO READ: Economists question if SA has a plan for US tariffs, Tau says here it is Set of measures in response to imminent US tariff Tau said the department announced a set of measures in response to the imminent 30% tariff hike on South African exports to the US, which comes into effect on 1 August. 'These urgent interventions are part of the dtic's ongoing commitment to protecting jobs, preserving market access in the US and promoting export diversification to alternate markets in Africa, the EU, Asia, Latin America and other strategic partners.' One of the most important interventions is the establishment of an Export Support Desk, which will serve as a direct point of contact for companies affected by the US tariff hike. Tau said the Desk will provide updates on developments and tailored advisory services to exporters on alternative destinations, guidance on market entry processes, insights into compliance requirements and linkages to South African embassies and high commissions abroad. 'This tariff hike poses a direct threat to our export capacity, particularly in strategic sectors such as automotive, agro-processing, steel and chemicals amongst others. As government, we are fully committed to supporting our exporters through this challenging time. ALSO READ: Citrus growers call on president to urgently intervene about 30% US tariff Dtic working with urgency now 'We are working with urgency and resolve to implement real, practical interventions that defend jobs and position South Africa competitively in a shifting global landscape. The stakes are high and we must respond decisively to ensure our export industries remain resilient, competitive and globally integrated into diversified markets.' Exporters are encouraged to engage directly with the Export Support Desk and also visit the dtic website regularly for updates and support mechanisms. Tau said the dtic remains steadfast in its mission to assist local producers and safeguard South Africa's trade interests amid growing global uncertainty.
