A month on from Liberation Day, what do investors know for certain?

IOL News

13-05-2025

Trump's April 2 'Liberation Day' announcement saw duties being levies across the world with South Africa attracting around 30%.
Image: Kamil Krzaczynski / AFP
More than a month on from Trump's 'liberation day' tariffs, which caused shockwaves globally, the dust is settling, but analysts and investors are arguably no more comfortable due to the rate of change. Locally, South Africa was hit with a 30% tariff, higher than the 25% worst-case scenario anticipated by the SA Treasury.
How significant is trade between South Africa and the US?
South Africa makes up about 2.50% of US imports, yet the US is our second-largest trading partner, accounting for 8.80% of our total exports.
In 2023, we exported $13 billion worth of goods to the US—roughly 2.10% of our GDP—with 98% of those exports coming from the mining and manufacturing sectors.
Previously, the US collected almost no tariffs on South African goods, while we imposed about 7% on theirs.
That dynamic has now shifted. The 30% tariff imposed by the US hits us hard, especially in key areas like aluminium and steel, which, though they only make up 0.30% of GDP, are central to ongoing trade talks.
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Another major blow is the 25% tariff on vehicle imports, which affects local manufacturing jobs, particularly with the BMW X3, 97% of which are made here for the US market. These tariffs pose a real threat to vital sectors of our economy.
Equity market investors must assess revenue exposure to the US
Understanding revenue exposure to the US helps investors gauge potential risks from new US tariffs. Even markets where the US runs a trade surplus can face impacts if their listed companies rely heavily on US sales, such as the UK, where 27% of listed equity revenues come from the US.
Which countries have the highest equity market revenue exposure to the US?
Taiwan and Canada lead in revenue exposure among trade deficit countries, with 43% and 33% of their listed company revenues tied to the US, respectively. Taiwan's TSMC, a major microchip exporter, is a key contributor. Europe (excluding the UK) follows with 23% exposure.
Quantifying potential risks from tariffs
Making numerical sense of potential risks from tariffs is tricky. While revenue exposure offers clues about vulnerability, quantifying tariff risk is complex due to varying sentiment effects and secondary or tertiary impacts that go beyond direct trade data.
How should investors approach market setbacks, especially in a volatile global trade environment?
Short-term market setbacks are a normal part of the investment cycle and are often followed by periods of recovery.
While each downturn may feel unique, these fluctuations are familiar patterns for long-term investors.
Quality, long-term investment solutions will be aligned with global, high-quality active managers who are equipped to navigate both the risks and opportunities presented by changing global trade dynamics.
Their expertise and flexibility help ensure that client portfolios remain resilient through various market conditions.
Adriaan Pask, Chief Investment Officer, PSG Wealth
Image: Supplied
BUSINESS REPORT