South Africa could see short-term benefits from US tariffs, such as lower coffee prices

Mail & Guardian

12 hours ago

South Africa could potentially see a drop in coffee prices as a result of the 50% tariff imposed on Brazil — the world's largest coffee producer — and the biggest supplier to the local market.
Some imported products could become cheaper in the short term as US tariffs take effect and as countries grapple with surplus in products,
South Africa was slapped with a 30% tariff on local goods, which officially took effect on
South Africa's
With limited access to the American market, these countries will have a surplus of products that they will have to sell at lower prices, economists said.
'For now, every country is looking for an alternative in terms of where they can sell the products that they were sending to the US, but that is not going to be easy,' said Thabile Nkunjane, an economist at the National Agricultural Marketing Council.
'That means that there is going to probably be a bit of an influx of some of the products, especially those that were being sent to that market.'
South Africa could potentially see a drop in coffee prices as a result of the 50% tariff imposed on Brazil — the world's largest coffee producer — and the biggest supplier to the local market.
'Two things are going to happen for Brazil — either they find alternative markets immediately, which isn't going to really happen, or two, they are going to have to sell their coffee at maybe relatively lesser prices,' Nkunjane told the
Mail & Guardian.
'For us, who are buyers of their coffee, are going to probably have a bargain when we import from them.'
But he warned there could be an adverse effect if the South American country runs low on supply due to unfavourable climate conditions or decides to vastly diversify its market.
The shake-up brought on by the US tariffs presents an opportunity for South Africa to pursue greater trade and investment with other countries in the Brics bloc, the deputy director general responsible for trade Xolelwa Mlumbi-Peter said.
'The aim is to advance this on the basis of complementarities. There is also a risk of potential trade diversion as the two economies look for alternative markets,' Mlumbi-Peter told the
M&G
.
'Hence, we have prioritised the implementation of trade defence measures in line with our international commitments in the World Trade Organisation.'
The price of rice coming from India — one of the world's largest producers of the grain — could also ease as it loses some of its access to the American market.
But while South Africa could benefit in the short term from lower import prices as its trading partners look for alternative markets to the US, local exporters will have to identify new buyers for their products.
India, for example, is very protective of its agricultural producers, noted Mmatlou Kalaba, a senior analyst and director at the Bureau for Food and Agricultural Policy.
'It looks inwards and only opens up for a short period when they have a need. Especially on agriculture or on more labour-intensive goods that India is able to produce themselves, they are very restrictive. They put up very high walls in terms of tariffs and non-tariff measures,' Kalaba said.
He said that South Africa should rather strengthen its relationship with Middle Eastern countries — to which it already exports beef — but the trade conditions could become tighter as different players enter the market.
'The US has imposed a 15% to 30% tariff on countries like Australia, New Zealand and Brazil, but our beef market has been mainly in the Middle East and the continent,' Kalaba said.
'What that means is that Australia, New Zealand, Brazil, Argentina and others who are affected by these tariffs, are looking for new markets as well. They are going to go to the high-income, oil-rich states of the Middle East — your United Arab Emirates, Saudi Arabia, Qatar and so on.
'This means the challenge now shifts to competition — it's not so much about the tariffs. Basically, the tariffs change, if I may say, the playing field to a third market, in some instances, so now we need to be competitive in those markets.'
The government says the US tariffs will
The
'This is not a plan B; it is a plan A for long-term resilience and competitiveness. We are committed to strengthening our relationships, particularly under the AfCFTA, to build regional resilience,' the department said.
'We will also continue the work we have started with our European partners towards enhancing our trade and investment relations in a manner that unlocks sustainable growth and development and entrenches South Africa in new supply chains.
'We are looking at Asia, including Japan, Vietnam and Thailand, the Middle East and India. We are pursuing these markets because we see growing demand, existing negotiations and a positive reception to South African products.'