South Africa's strategies to combat US 30 percent import tariff
Image: Lee Rondganger/IOL
The South African government says it has put various alternative mechanisms in place to avert the proposed US 30% import tariff wall on South African exporters ahead of the August 1 deadline.
South Africa is among several countries facing punitive tariffs from the US as it moves to protect its own manufacturer and labour force.
US President Donald Trump announced the tariffs in April, but delayed them for 90 days to allow countries to negotiate better deals.
South Africa has been trying to negotiate a trade deal with the US since May but is yet to agree on terms.
On Tuesday, the Department of Trade, Industry and Competition (DTIC) said it remains committed to the cause and awaits substantive feedback from the US on the final status of the country's framework deal.
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The department said it has been in a period of intense negotiations with the US and had signed a condition precedent document and 'have readied our inputs for entry into the template which is to follow from the US'.
'Despite the challenges that have been presented by this period, we have put our best foot forward, bringing together the subject specialists within our ranks that have dug deep to ensure that our country is adequately prepared for a number of potential scenarios,' DTIC said.
However, the DA said this was deeply concerning and raised far more questions than answers, adding that the offer on the table would not satisfy a US administration that is driving a hard bargain.
Asked what measures have been put in place to avoid the worst scenario, the DTIC spokesperson Kaamil Alli said the department has also been working actively with industry associations and export councils to explore alternative markets for 'our' goods.
Alli added that the department was also working with the National Treasury and other departments on a support package for affected industries.
While Allie did not reveal further details regarding this, it has been reported that the government has offered the motor vehicle and agricultural sectors alternative markets and possible Treasury-backed tax incentives, which is a two-pronged contingency plan to keep production lines humming should the US impose a 30% tariff on the country's exports.
According to the DA, this is meant to make up for DTIC Minister Parks Tau and the ANC's failed foreign policy.
'Instead of securing a trade deal, Tau now expects our Treasury to borrow or tax South Africans more to pay for the costs of the ANC's association of our state with rogue nations like Iran. The National Treasury and by implication South Africans cannot be the funder of last resort if Tau fails to reach a US deal by midnight,' said Mark Burke, the party's spokesperson on Finance.
On Wednesday, Minister of Mineral and Petroleum Resources, Gwede Mantashe, told journalists that the country must look for alternative markets should the US impose high tariffs, particularly in relation to critical minerals.
Mantashe added that while diplomatic engagements with the US continues, the country must also diversify its trading partners.
'The diplomatic discipline will engage the US, but it doesn't stop us from diversifying our markets. If the US imposes high tariffs, we must look for alternative markets. Our biggest trading partner is China, it's not the US.
''The US is number two. It means that if they impose heavy tariffs on us, we must look more for alternative markets in the world. They are there. They are available. We must exploit them,'' Mantashe said.
The DTIC's proposed deal features a number of areas, including importing 750-100 petajoules of Liquified Natural Gas for a 10 year period, unlocking $12 billion. Enabling agricultural market access by simplifying US poultry exports under the 2016 tariff rate quota and unlocking approximately $91m million in trade.
South African firms committed to invest $3.3bn in US industries such as mining and metals recycling, while both governments agreed to pursue joint investment in critical minerals, pharmaceuticals and agri-machinery.
Alli added that while many issues have been addressed, the challenges however, are around agricultural imports which need to meet health and sanitary standards.
manyane.manyane@inl.co.za
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