Trump wants to protect South Africa's White farmers. But potential changes to trade privileges would hurt them

Yahoo

02-03-2025

A contentious law that allows South Africa's government to expropriate land – without compensation in some cases – has enraged the United States, triggering aid cuts by Washington and outbursts from President Donald Trump.
Many fear that the African nation could now potentially lose some of its US trade privileges as relations between the two countries deteriorate.
South Africa is the largest beneficiary of the African Growth and Opportunities Act (AGOA), a US trade agreement that provides preferential duty-free access to US markets for eligible Sub-Saharan African nations.
Some US lawmakers want those benefits withdrawn when AGOA is reviewed this year.
In January, South Africa enacted the Expropriation Act, seeking to undo the legacy of apartheid, which created huge disparities in land ownership among its majority Black and minority White population.
Under apartheid, non-White South Africans were forcibly dispossessed from their lands for the benefit of Whites. Today, some three decades after racial segregation officially ended in the country, Black South Africans, who comprise over 80% of the population of 63 million, own only around 4% of private land.
The expropriation law empowers South Africa's government to take land and redistribute it – with no obligation to pay compensation in some instances – if the seizure is found to be 'just and equitable and in the public interest.'
President Cyril Ramaphosa said the legislation would 'ensure public access to land in an equitable and just manner.' But the White House disagrees.
Trump and his South African-born billionaire adviser Elon Musk believe that the land reform policy discriminates against White South Africans. Sanctions have since followed.
Responding to a post by Ramaphosa on X about the new legislation, Musk asked: 'Why do you have openly racist ownership laws?'
In an executive order issued on February 7, Trump revoked all aid for South Africa, accusing the country of human rights violations. He also denounced South Africa's stance against Israel's war in Gaza, saying the nation undermined US national interests.
The executive order did not specify what aid was being halted but nearly $440 million was committed to South Africa in 2023 – the bulk of which went to its health sector – according to data on the US Foreign Assistance website.
Ramaphosa said in a post on X before the order was issued that, 'with the exception of PEPFAR Aid (the US President's Emergency Plan for AIDS Relief) which constitutes 17% of South Africa's HIVAids programme, there is no other funding that is received by South Africa from the United States.'
Economist Ndumiso Kubheka told CNN that South Africa could be on the verge of losing its trade benefits with the US under AGOA.
'Based on the changes in trade policy and national interests of the US government, the possibility of changes and South Africa's exclusion does exist,' he said.
To remain eligible for AGOA, a benefiting nation 'must demonstrate respect for rule of law, human rights … (and) should also not seek to undermine US foreign policy interests,' according to requirements outlined on its website.
In a letter to Trump on February 11, US Rep. Andy Ogles and three other Republican congressmen called for South Africa's duty-free access to the US market to be withdrawn and for diplomatic ties to be suspended, expressing disapproval of its land reforms, its alleged 'vendetta against Israel' and its 'embrace of China.'
South Africa's exports are partly driven by agriculture, which accounted for 10% of the country's total export earnings in 2021, according to the National Agricultural Marketing Council (NAMC). South Africa is the main agricultural exporter under AGOA and its largest beneficiary, according to the US Department of Agriculture.
In a 2023 report, the department said that two-thirds of South Africa's agricultural exports to the US 'are exported tariff-free under AGOA,' with exporters of citrus, wine and fruit juice among the top beneficiaries.
Victor Thindisa, a senior manager for Markets and Economic Research at NAMC, told CNN that removing the nation from AGOA would deal a serious blow to its agricultural industry.
'South Africa is likely to face higher tariffs of about 3% for agricultural exports to the USA should the country be ineligible for AGOA benefits,' he said.
'The loss of preferential market access for the agricultural sector could lead to reduced foreign exchange earnings, decreased competitiveness of South African agricultural products in the USA, and potential job losses,' Thindisa added.
The move might also run counter to the Trump administration's apparent aims. Stripping South Africa of its AGOA privileges on account of its expropriation law would hurt the same White farmers whom the US seeks to protect, according to Chrispin Phiri, a spokesperson for the country's foreign minister.
'If you look at the produce that finds its way into the US markets, it primarily comes from our agricultural sector, which is primarily White farmers,' Phiri told CNN.
He added that: 'It's a known fact that most of our commercial farmers are White. They are the ones who are in the majority in the commercial agricultural sector, and they have a commercial gain from an agreement like AGOA. So, the very same people that you believe are being persecuted would be persecuted by such a volatile decision.'
Citrus grower Gerrit van der Merwe, who exports to the US from Citrusdal in the Western Cape province, told CNN that South Africa's likely exclusion from AGOA would lead to job cuts.
'It would affect us considerably and threaten local jobs,' he said. 'It is difficult to estimate precisely to what extent. Citrus is the economic heart of Citrusdal, and any shocks or changes in the industry affect the entire rural community.'
Justin Chadwick, who heads South Africa's Citrus Growers Association (CGA), said the group was concerned about the situation.
'If AGOA is not renewed, it will create a challenging environment for South African citrus. AGOA ensures our citrus isn't subject to US tariffs. A US tariff on South African citrus would make our fruit more expensive for American consumers.'
Chadwick told CNN that thousands of rural jobs were at risk.
'To give you an idea of how many jobs are currently connected to US citrus export: an estimated 35,000 local jobs from farm level throughout the supply chain as well as an additional 20,000 jobs in the US are sustained by US-SA citrus exports. Without AGOA, these jobs will surely be under threat.'
At least 100,000 pallets of citrus are shipped to the US from South Africa annually, he said, adding that 'South Africa's entire North American exports make up around 9% of our total citrus exports.'
Outside the Americas region, which accounted for 6% of South Africa's agricultural exports in 2024, the African continent is the main market for the country's agricultural goods, making up 42% of its agricultural exports, according to the Agricultural Business Chamber of South Africa (Agbiz).
Other export destinations include Asia and the Middle East, which together totaled 21%, and the European Union, which made up 19% of South Africa's agricultural exports for 2024, Agbiz data showed.
Despite the comparatively lower trade volume, the US market 'matters significantly,' according to Wandile Sihlobo, chief economist at Agbiz.
'Firstly, the exports (to the US) are concentrated in specific industries, mainly nuts, citrus, wines, grapes, and fruit juices. This means while the risks associated with this market are not as significant in proportion to overall agricultural exports, they present challenges to specific industries,' he said.
Secondly, Sihlobo said, 'the negative sentiment arising from any confrontation with the Americas region would have negative effects on South Africa's agriculture.It is, therefore, vital that South Africa maintains positive agricultural relations with this region.'
For the citrus grower Van der Merwe, finding an alternative destination for his produce if South Africa is removed from AGOA and exporting to the US becomes less profitable would not be easy.
'We would still probably export quantities (of) citrus to the US, but given that the usual tariffs would then apply, it would be a big setback,' he said. 'South African citrus is valued in other markets like the Middle East and the EU, and switching to those markets if it is more profitable can be considered. But the volume of exports for us to the US is large, it will be difficult for it to be absorbed elsewhere.'
South African leader Ramaphosa said on Thursday he was ready to 'do a deal' with the US to repair their plummeting relations.
'We would like to go to the United States to do a deal,' he said while responding to questions from Richard Gnodde, vice chairman of US bank Goldman Sachs, during a conference in Johannesburg.
'We don't want to go and explain ourselves,' he added. 'We want to go and do a meaningful deal with the United States on a whole range of issues.'
Ramaphosa did not specify what the deal would entail but noted it would span trade, diplomatic and political issues.
'We decided that it's not best to have a knee-jerk reaction,' Ramaphosa said of Trump's executive order cutting aid to his nation. 'We wanted to let the dust settle.'