Strategies for South African SMEs to cope with Trump's tariff challenges

IOL News

6 days ago

With the implementation of Trump's 30% tariffs, South African SMEs face significant challenges that threaten their margins. Experts urge local businesses to act swiftly and strategically to adapt to an uncertain economic landscape.
Image: File
With US President Donald Trump's 30% tariffs having come into effect, South African small and medium-sized enterprises (SMEs) have been bracing for the knock-on impact across supply chains, input costs, and consumer spending.
While global headlines focused on Washington, the EU, Canada, and Beijing, experts said local businesses needed to act quickly to protect margins and plan for uncertainty.
Thomas McKinnon, chief growth officer at SME services provider Lula, said businesses had to be proactive. "If your product offered exceptional quality, niche appeal, or a distinct competitive advantage, demand might have persisted even with higher tariffs," said McKinnon.
From a cash flow perspective, every cent counts. 'Now is the time to look for any big or small ways in which you can streamline your operations, reduce waste, and negotiate better terms with suppliers. The tariffs will have a knock-on effect that we will more than likely see across the board and SMEs need to be ready and prepared,' said McKinnon.
Consumers were already feeling the pinch, especially after Eskom's latest electricity tariff hike. McKinnon said businesses might have had to absorb some of the costs to stay competitive, making internal cost-cutting vital. He also urged SMEs to review their forecasts and cash flow closely.
"Consider short-term funding options to bridge any potential cash flow gaps during this transition period,' McKinnon said. "Having agile financial solutions in place can provide a crucial buffer as SMEs adapt to the new economic landscape,' he added.
Cornelius Coetzee, South Africa country director at cross-border payments company Verto, agreed that a longer-term view was essential.
'This moment necessitated a strategic, long-term vision rather than short-sighted, defensive measures,' said Coetzee. 'The potential implementation of broad tariffs would represent a significant misstep, carrying the considerable risk of triggering a detrimental chain reaction,' he said.
Coetzee added that among the spillover effects were increased costs for consumers, severe disruptions to manufacturing supply chains, and a substantial blow to the country's vital export industries. 'Such a policy would, in effect, penalize the very innovation and efficiency that are essential for South Africa's economic prosperity,' he said.
Goitseona Raseroka, supply chain lead for Accenture Africa, warned that global trade shifts were already reaching South Africa. 'Tariffs are climbing again, fast, and hard. Our research shows that the average US tariff rate has risen from around 2.4% at the end of 2024 to 29% today. That is the highest level in over a century," she said.
While most of the attention was on the US and China, the impact is widespread. 'When tariffs rise in the United States or Europe, the cost of goods increases across supply chains. Components become more expensive. Shipping becomes unpredictable. And somewhere down the line, the cost shows up on South African shelves,' said Raseroka.
Accenture estimated that for American households, this tariff shock could add the equivalent of R40 000 per year in extra costs. 'Now imagine what that kind of inflationary pressure could mean for South African consumers,' Raseroka said.
Raseroka added the unpredictability was more troubling than the costs. 'These tariffs are not being introduced in a slow and considered manner. They arrive fast, they shift quickly, and they often come with little warning. One month a sector is stable, the next it is caught in a trade dispute,' she said.
'The smart move is not to panic, but to prepare,' said Raseroka. 'Resilience has become the new currency in global trade. It is not about reacting to the next tariff hike, it is about building the kind of systems and strategies that can adapt to multiple futures. We need to move from hoping things will settle to actively preparing for the fact that they might not,' she added.
Raseroka said SMEs needed to know their margins, diversify suppliers, consider local sourcing where possible, invest in digital tools for real-time visibility, and train teams in scenario modelling.
'South African businesses have navigated through currency shocks, power cuts, policy uncertainty and commodity price swings. We are used to volatility. What we need now is to take that resilience and turn it into a forward-looking strength,' Raseroka said.
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