SA hit harder by US tariffs than rivals, amplifying export blow
Lawrence Edwards, professor at the University of Cape Town's School of Economics, has warned that the most serious threat posed by new US tariffs on South African exports lies not just in their size, but in how they stack up against duties imposed on competitors.
Earlier this week on Monday, US President Donald Trump announced tariffs of 30% on South African goods with the exception of precious metals.
According to UCT's analysis, the 30% reciprocal tariff places South Africa at the upper end of affected countries when compared with its competitors. 'This could lead to US consumers buying competitors' products, which amplifies the negative effects of the tariffs in South Africa,' Edwards said. He estimates that the duties could affect around R2.3 billion in local exports.
Aiste Bijune, consultant for Economies and Consumers at Euromonitor International, has said that the tariffs 'will raise the cost of South African goods in the US, likely dampening US consumer demand on imports and reducing their export volumes'.
Donald MacKay, CEO of XA Global Trade Advisors, said tariffs already in place – and those expected – affect about 1.3% of South Africa's gross domestic product (GDP). 'That doesn't mean it's going to move the GDP down by 1.3%, but that is the portion of our GDP that has the potential to shift,' he explained during a webinar on Friday.
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Daily Maverick
5 hours ago
- Daily Maverick
FSCA cleared to go global and pursue R50m fine for Viceroy over Capitec report
Following a high court ruling, South Africa's market cop has grown a new set of teeth that can pierce across borders. In a landmark ruling on 9 July, the Pretoria High Court handed the Financial Sector Conduct Authority (FSCA) a powerful new weapon: the ability to fine foreign entities that mess with South Africa's markets, even if they've never set foot in the country. The FSCA said that it considers this a significant legal victory and believes that it is an 'essential part of protection of the public in an interconnected, digital global financial environment'. For the likes of Viceroy Research, which became a household name in 2018 after detonating a bomb under Capitec with a dodgy research report, the rules of the game have changed. The next time a hedge fund hit squad fancies nuking a JSE-listed stock with dubious 'research', they might want to budget for a fight in a South African court. How to burn R9.3-billion before lunch In January 2018, Viceroy lit a match in the form of a report titled Capitec: A wolf in sheep's clothing. The report accused the bank of 'predatory lending practices', pushing clients into debt spirals and called for an immediate curatorship by the South African Reserve Bank (SARB). The report went on to claim that Capitec had to write off more than 42% of the gross collectible principle due to it in the 2017 financial year, even suggesting the loan book was an 'irreconciliable R3-billion'. Twitter went feral, media outlets amplified the claims, and by closing bell, Capitec's price share had plummeted 23%, erasing R9.345-million in market value, according to a FSCA newsletter sent out in September 2021. The SARB scrambled to calm markets, assuring everyone that Capitec was solvent, capitalised and had adequate liquidity. The stock might have bounced back, but the reputational shrapnel lingered. The FSCA later warned that Viceroy's falsehoods 'posed a clear and present threat to the stability of the South African financial system'. Capitec told Daily Maverick that the bank has 'consistently maintained the 2018 report was misleading and caused unwarranted harm'. A calculated hit and a big payday The watchdog eventually pieced together that Viceroy was executing a targeted hit. A transcript of a hearing held by the Financial Services Tribunal (FST) in October 2022, reveals that Viceroy had a deal with a hedge fund, Oasis. It would $100,000 a month for tailor-made hit pieces plus 12.5% of the profits from short positions. Oasis banked an estimated R82-million, and Viceroy's cut was estimated by the FSCA to be close to $744,482 (R10-million at the time). All while ignoring legal obligations to correct falsehoods under the Financial Services Act. Dodging the net The FSCA initially slapped Viceroy with a R50-million fine for breaching Section 81 of the Financial Markets Act, which bans false or misleading statements about listed securities. FSCA commissioner Unathi Kamlana hoped the penalty would be 'a deterrent to those hoping to make a quick buck by peddling false information'. Viceroy cried foul, basically saying, 'You can't touch us, we're not in South Africa'. Shockingly, the Financial Services Tribunal largely agreed. The tribunal admitted that Viceroy's actions 'had an effect' on South Africa. But under common law, they said, you need to serve a foreigner in person while they're in the country to establish jurisdiction. The fine was set aside and the case was closed. Or so Viceroy thought. Closing the loophole The FSCA fought back and launched an application to review the decision to scrap Viceroy's fine. The Pretoria High Court ruled on 9 July 2025 that clinging to an area of physical service would 'hamper and frustrate the effective regulation of financial activity that takes place extra-territorial and digitally'. Citing section 173 of the Constitution, the court developed the common law. The FSCA can fine a foreigner if: Notice is delivered by any means (including electronically); and The conduct's link to South Africa is 'sufficiently close'. 'The court remitted the reconsideration application brought by Viceroy Research and partners back to the Financial Services Tribunal, so that a decision can be made on the merits,' the FSCA said. The case is not yet closed, but the R50-million penalty is back on the table. The FSCA remains confident that it made a clear and compelling case against Viceroy. 'The public can take confidence from the fact that the FSCA will not shy away from taking appropriate action to protect its investigation and enforcement powers to ensure appropriate investor protection and the integrity of financial markets,' it said. DM
Daily Maverick
5 hours ago
- Daily Maverick
The Trump administration's rebellion against history and common sense
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In fact, in most of the articles that are looking forward to that wondrous, brave new world, the assumption is that America's decline has become an axiomatic inevitability. Moreover, for some writing about such a future tantalisingly just beyond the horizon, such an eventuality is to be eagerly anticipated, in contrast to that American-led, rules-based order (albeit unevenly exercised) that exists now. One can almost feel the schadenfreude emanating from this geopolitical version of 'The Wizard of Oz' chant, 'Hail, hail the witch is dead; the wicked witch is dead.' Beyond articles, there is even a cottage industry of books on this subject, such as Amitav Acharya's recently published, The Once and Future World Order. Post-Vietnam But it should also be recalled that this discussion is something of a reprise of the conversation that became the authorised version of things in the aftermath of the Vietnam conflict. Back in the mid-1970s, it was confidently assumed — even predicted as inevitable — that America's best days could only be seen via a rear view mirror rather than looking forward. Henry Luce's 'American century' was already en route to the rubbish tip. But were there really strong reasons to assume the decline of America in the future was axiomatic and inevitable — and that renewal was impossible? (In fact, the decline of nations and civilisations has been the subject of debate by philosophers and historians for millennia. The ancient Greeks had divided history into gold, silver, and bronze ages as the greatness of the past inevitably declined to the less valuable alloy of the present. St Augustine, in his volume, The City of God, had argued that the decline of Rome in his time was not, despite pagan critics, the fault of the spread of Christianity. Instead, that faith had helped preserve the Empire, even in its weakened state. More recent writers like Edward Gibbon in The Decline and Fall of the Roman Empire had insisted that its internal contradictions and religious and cultural divisions had inevitably led to its downfall. And after the destruction of World War 1, Oswald Spengler had insisted in The Decline of the West that the civilisation comprising that collection of nations was inevitably heading towards its collapse.) In the immediate post-1975 years, the conventional wisdom was that, for America, there was nothing ahead but a long but inevitable, slow slide into global second or even third place. And especially given the disastrous effects on the country from its excruciating experience in Vietnam, that decline was something approaching faster still. Evolving from that view, the future most probably belonged to the Soviet Union, along with its (sometimes reluctant) allies, which was poised to be the wave of the future, per that implacable Marxist logic. And the momentum was growing. But that was then. Just a decade and a half after such a view, by 1990, the Soviet Union was no more. It had disintegrated due to its inability to address successfully the defence budget challenge posed by the US, multiplied by the Soviet Union's creakily inefficient — even sclerotic — economic system. And, surprisingly to many, it was unable to address internal pressures from ethnicities inside the borders of the old USSR, plus the resurgent nationalisms and desires for greater individual liberties in the countries dominated by the USSR in Eastern Europe since the end of World War 2. China and the USSR/Russia One important footnote was that the idea of an existential challenge posed by China to the US was barely envisioned back then. Throughout the 1970s and 80s — and even on into the 1990s — China was not seen as a truly serious challenger for the top spot, given that it was still rebuilding from the excesses and depredations of its Cultural Revolution. It was only when China entered into the regulatory framework of the WTO — the World Trade Organisation — and had enacted a wide range of economic reforms that its export-oriented industries really took off, turning the country into the global manufacturing powerhouse it has since become. Think back to the early-to-mid-1970s. Seeking a counterbalance to the manifold military and political challenges coming from the then Soviet Union, even as the US was still in the last tormented years of the tragic entanglement of its Vietnam misadventure, Secretary of State Henry Kissinger drew on the lessons of 19th-century realpolitik thinking and the 'Concert of Europe.' The key was to carry out a triangulation of relationships, balancing America between the then Soviet Union and China and using a new Chinese relationship to balance the energies of the Soviet Union. Particularly for China, it dangled the possibilities of greater access to the American economy and the larger international order against its continuing economic isolation. For the Soviet Union, it offered both the possibilities of finding a way out of its costly military (and nuclear) standoff and dangled possibilities for greater international investment in the USSR. For decades, this triangular balance held, until the three parties' divergent intentions for the global future became manifest. By the time of the Trump administration 2.0, the fracturing of this triangular balance has now become the reality with the increasing coming together of Russia and China. Perhaps that was to be expected for many reasons, not least because of the way the two economies dovetail tightly. But it has also been significantly abetted by the mercurial nature of Donald Trump's approach to foreign and economic relations, including his constantly changing positions on tariffs. Vladimir Putin's Russia has been determined to reassert its control over czarist Russia's possessions — and especially Ukraine — as well as its broader sphere of influence. This parallels a belief in the importance of an older Russian value system that eschews the perceived moral slackness of Western nations that could infect Russia as well, if unchecked. Such attitudes and ideas are driving forces in Russia's onslaught on Ukraine (and parts of Georgia), along with its not particularly subtle threats towards the Baltic nations (Finland, Estonia, Latvia, and Lithuania), once part of the Russian empire — and even underpins suspicious-sounding hints directed at other eastern members of Nato. Meanwhile, Xi Jinping's China is determined to create its own primacy in the international economy, something being built largely upon its massive capabilities as a manufacturer/exporter, as well as its increasingly imposing position in developing and putting to use new and emergent technologies. This stands in stark contrast to the US which, under Trump, is busy ramping down R&D support by the government in those very same technologies of the future. Running in the background, of course, for China's leaders (and many of its people) is a realisation that half a millennium ago, its economy was the largest and most productive on the planet. That history also contributes to the country's leadership cadre's real desire to regain the high ground heading into the rest of the 21st century. The US As for the Americans, after decades of being positioned as the global primus inter pares nation, and having imbibed the idea that it was the essential nation, under its incumbent president, the decision has been made to pull back from international engagement and long-established relationships. Instead, rather than seeking to engage energetically with either Russia or China to reach a newer version of a modus vivendi that might echo what Kissinger had achieved in his time, after first cozying up to Russia largely on Putin's terms, the Trump administration now seems intent on finding disagreements with both China and Russia — and with Western Europe's EU as well. In the latter case, this is despite the largely overlapping membership of those nations in the Nato alliance with America. Resolute positions that are made in conjunction with heretofore longstanding allies is not a strong suit for the Trump administration as it meanders directionless through the landscape of global issues — in addressing Russian actions in Ukraine, the continuing conflicts of the Middle East, or the collapsing structure of the global trading regimen. Under Donald Trump's deeply uneven, mercurial leadership, the US has managed to position itself against its three other major global economic or security competitors, as well as with the BRICS formation, for whatever that grouping really matters, thrown in for good measure. Effectively, the Trump administration is busy running the table in a hunt for potential or real antagonists. Even further, it has now tossed overboard efforts to find areas where cooperation could be found with this collection of forces. This could have included the threats of environmental degradation and climate change; instead, it has labelled all of that as a hoax designed to suck out the wealth of the US for the benefit of undeserving others. Historical examples But history says multi-directional competitions waged against a full sweep of potential partners turned enemies cannot be a successful plan for the longer strategic interest of the US, even as it offers some possibilities for individual tactical (and temporary) gains. Consider the following examples drawn from history, showing the failure of such omnidirectional antagonisms, even from an ostensible position of great strength. For example, by the early part of the 19th century, Napoleon had established a European system that drew in virtually all the nations of Europe, save for the United Kingdom. But that hierarchical system with France at the peak broke apart in the wake of Napoleon's failed Russian campaign. As a result, by 1814, his military was confronting an alliance that overwhelmed any chances for a continuation of a European system captained by an imperial France. The alternative, hammered out in the Treaty of Vienna after Napoleon's downfall — the 'Concert of Europe' — largely managed continental issues until the tensions between two groups of nations overwhelmed the continent with the outbreak of World War 1. Similarly, in 1940, Germany was ascendant over most of Europe, save for Britain. For many observers, including the American Ambassador to the UK, Joseph P Kennedy, it seemed the Germans would, even if they did not actually invade the British Isles, eventually be able to wear down the British into a kind of sullen submission. But the delusion and enticement of still greater victories led to the disastrous invasion of the Soviet Union. And if that was not sufficient, just days after Japan's own effort to gain control over the Pacific Ocean through its attack at Pearl Harbor, Germany declared war on America as well. Facing three determined, powerful enemies simultaneously led to Germany's total and complete destruction by those three allied nations, despite their very different goals for what would come after the defeat of the Third Reich. Or look further afield for an example of how overweening hubris can deliver national disaster. Consider the fate of Paraguay in its war with three neighbours during the years 1865-70. Its ruler, Francisco Lopez, had built a formidable military (at least in Latin American terms) and Lopez decided for some reason that it would intercede on Uruguay's side in Uruguay's dispute with Brazil. Things soon turned into a war that pitted Paraguay against an alliance comprising the combined might of Uruguay, Brazil and Argentina. The inevitable result was its utter defeat. By the end of hostilities, the population of Paraguay fell to around 250,000 people, with only 25,000 men remaining in the country, and with big chunks of territory ceded to its neighbours. Things were so dire, Paraguay received a unique papal dispensation to allow polygamy to restock the country's population. While virtually nobody believes the fatal outcomes for Napoleonic France, Hitler's Germany or Lopez's Paraguay awaits America despite ill-fated decisions by its president effectively to confront all of its international competitors or frenemies pretty much simultaneously, the facts remain what they are — the road ahead will be increasingly fraught for an America without friends or even negotiating partners in a complicated world. Such a stance is in opposition to its own larger, longer-term interests. DM
eNCA
6 hours ago
- eNCA
European powers plan fresh nuclear talks with Iran
BRUSSELS - European powers plan fresh talks with Iran on its nuclear programme in the coming days, the first since the US attacked Iranian nuclear facilities a month ago, a German diplomatic source told AFP on Sunday. Britain, France and Germany, known as the E3, "are in contact with Iran to schedule further talks for the coming week", the source said. The trio had recently warned that international sanctions against Iran could be reactivated if Tehran does not return to the negotiating table. Iran's Tasnim news agency also reported that Tehran had agreed to hold talks with the three European countries, citing an unnamed source. Consultations are ongoing regarding a date and location for the talks, the report said. "Iran must never be allowed to acquire a nuclear weapon. That is why Germany, France and the United Kingdom are continuing to work intensively in the E3 format to find a sustainable and verifiable diplomatic solution to the Iranian nuclear programme," the German source said. Israel and Western nations have long accused Iran of seeking to develop nuclear weapons, a charge Tehran has consistently denied. On June 13, Israel launched a wave of surprise strikes on its regional nemesis, targeting key military and nuclear facilities. The United States launched its own set of strikes against Iran's nuclear programme on June 22, hitting the uranium enrichment facility at Fordo, in Qom province south of Tehran, as well as nuclear sites in Isfahan and Natanz. - Kremlin meeting - Iran and the United States had held several rounds of nuclear negotiations through Omani mediators before Israel launched its 12-day war against Iran. However, US President Donald Trump's decision to join Israel in striking Iranian nuclear facilities effectively ended the talks. The E3 countries last met with Iranian representatives in Geneva on June 21 -- just one day before the US strikes. Meanwhile on Sunday, Russian President Vladimir Putin held a surprise meeting in the Kremlin with Ali Larijani, top adviser to Iran's supreme leader on nuclear issues. Larijani "conveyed assessments of the escalating situation in the Middle East and around the Iranian nuclear programme", Kremlin spokesman Dmitry Peskov said of the unannounced meeting. Putin had expressed Russia's "well-known positions on how to stabilise the situation in the region and on the political settlement of the Iranian nuclear programme", he added. Moscow has a cordial relationship with Iran's clerical leadership and provides crucial backing for Tehran but did not swing forcefully behind its partner even after the United States joined Israel's bombing campaign. - Snapback mechanism - Iran and world powers struck a deal in 2015 called the Joint Comprehensive Plan of Action (JCPOA), which placed significant restrictions on Tehran's nuclear programme in exchange for sanctions relief. But the hard-won deal began to unravel in 2018, during Trump's first presidency, when the United States walked away from it and reimposed sanctions on Iran. European countries have in recent days threatened to trigger the deal's "snapback" mechanism, which allows the reimposition of sanctions in the event of non-compliance by Iran. After a call with his European counterparts on Friday, Iranian Foreign Minister Abbas Araghchi said the Western allies had no grounds for reactivating sanctions. "If EU/E3 want to have a role, they should act responsibly and put aside the worn-out policies of threat and pressure, including the 'snap-back' for which they (have) absolutely no moral (or) legal grounds," Araghchi said on X. However, the German source on Sunday said that "if no solution is reached over the summer, snapback remains an option for the E3". Iran last week said there would be no new nuclear talks with the United States if they were conditioned on Tehran abandoning its uranium enrichment activities. fec/gv By Femke Colborne
