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The Star
a day ago
- Business
- The Star
US tariffs will test South Africa's economic resilience
Nyaniso Qwesha | Published 5 hours ago On August 1, 2025, the United States will impose a 30% tariff on select South African exports, a move the Trump administration frames as a corrective to "trade imbalances" but which South Africa decries as a unilateral overreach. President Cyril Ramaphosa has rejected the US justification, noting that 77% of U.S. goods enter South Africa duty-free, with an average tariff of just 7.6%. Yet, the policy threatens to derail South Africa's fragile economic recovery, destabilise global supply chains, and escalate protectionist tensions worldwide. This article examines the tariff's sectoral impacts, systemic risks to multilateral trade, and strategic responses to mitigate the fallout. South Africa's automotive sector, a beneficiary of the African Growth and Opportunity Act (AGOA), faces existential risk. Reuters reported that the US absorbed 6.5% of South Africa's vehicle exports (worth $1.8 billion in 2024) and is a critical market for manufacturers like BMW and Ford. The 30% tariff could force plant closures and mass layoffs, eroding a sector contributing 5.2% to GDP. Citrus: The U.S. accounts for 5–6% of South Africa's citrus exports ($100 million annually), supporting 35 000 jobs. Tariffs may cede market share to Chile and Peru. Wine: Producers are scrambling to redirect stock or absorb price shocks, but the U.S. market's premium margins are irreplaceable. Macadamia Nuts and Grapes: High-value perishables face logistical hurdles in pivoting to new markets swiftly. The textile sector may lose competitiveness in the U.S., while aluminium exports face a $534.5 million risk, with 24.6% going to the U.S. Furthermore, the South African Reserve Bank warns of 0.3% GDP contraction and 100,000 job losses. Fiscal strain from reduced export revenues and a weaker rand. The tariffs will disrupt global logistics: Freight bottlenecks: A pre-tariff rush to ship goods to the U.S. has already caused 6–10-week delays on routes like China and South Africa. Cost inflation: U.S. consumers will pay more for South African goods, while businesses face redundant inventory and working capital crunches. BRICS Retaliation: The U.S. has threatened an additional 10% tariff on BRICS-aligned nations, politicising trade. WTO Erosion: Unilateral tariffs bypass dispute mechanisms, undermining multilateralism. South Africa may expand its exports by increasing trade with markets in the EU and Asia. AfCFTA: Boosting intra-African trade as a buffer. The trade deal reached today (27 July 2025) between the United States and the European Union will ease tariff barriers and improve market access between the two economies. For South Africa, this development could have significant ramifications. First, EU exporters may displace South African goods in U.S. markets, particularly in competitive sectors like wine, citrus, and manufactured components. Second, the EU may divert more of its exports to the U.S., limiting the space for South African exports to expand into Europe. Unless offset by diplomatic interventions and aggressive trade diversification, this deal risks marginalising South Africa in both the U.S. and EU markets simultaneously. To navigate the crisis, South Africa must leverage trade finance tools: Export Credit Facilities: Bridge cash flow gaps for exporters facing margin compression. Risk Mitigation: Insurance products to hedge against payment delays and demand shocks. Market Diversification: Enter new markets (e.g., EU, ASEAN). Local Substitution: Support domestic production to replace costly U.S. imports. Conclusion: The U.S. tariffs are a stress test for South Africa's economic resilience. While the short-term pain is inevitable, strategic diplomacy, trade finance innovation, and market diversification could transform this threat into an opportunity for long-term resilience. The world will watch whether South Africa and the global trading system can adapt without fracturing further. About the Author : Nyaniso Qwesha, MBA, is a trade finance consultant with expertise in global commerce and risk management. He advises clients on trade policy, market access, and financial solutions in emerging economies.
The Star
a day ago
- Politics
- The Star
Bumpy road lies ahead for the nation
Kenneth Mokgatlhe | Published 5 hours ago President Cyril Ramaphosa and his US counterpart, Donald Trump, met in the While House recently. The US has been very critical of South Africa's foreign policy stance, which, on many occasions, went against the American national interests, according to the writer. Image: AFP September, a month synonymous with renewal and new beginnings, will be the most challenging period in South Africa's political and economic landscape due to actions likely to be taken by the US against the country. The first is the end of the African Growth and Opportunity Act (AGOA), which is set to expire in September. However, the new 30% tariffs introduced by the US for SA will likely override the existing AGOA conventions when they take effect at the beginning of August 2025. The second biggest conundrum will be the possibility of the US Senate's decision on the US-South Africa Bilateral Relations Review Act of 2025. The ground is fertile in the US to act against the South African government, which is believed to have acted against the US's national interests. The US has been very critical of South Africa's foreign policy stance, which, on many occasions, went against the American national interests. This has been evident in their divergent voting patterns on various United Nations (UN) platforms, where South Africa and the US have often taken opposing positions. The relations between the US - SA did not break during the Trump administration, and Joe Biden also raised similar concerns about South Africa. The ANC should be told, 'You made your bed, now lie in it.' They have chosen to strengthen their alliances with the geopolitical rivals to the West at the expense of decades of working partnerships with the Western powers. It was very shortsighted of the ANC to believe that there would not be actions or reactions from the side of the US on how it is being undermined by Africa's powerful regional bloc. The escalating tensions between the US and South Africa took an uphill path in 2022 when South Africa was alleged by the US to have loaded the Lady R with armaments that would be used in the Russia-Ukraine conflict. The South African government dismissed this allegation. In 2023, in the aftermath of Israeli attacks by Hamas on the 7th October 2023, we saw South Africa continuing with its support for Hamas, a designated terror organisation by countries such as the US and European Union (EU) countries. Dr. Naledi Pandor kicked off a diplomatic storm when she agreed that she had a telephonic conversation with the same Hamas and offered them humanitarian support, a vicious group that invaded Israel and killed more than 1 200 innocent civilians and kidnapped more than 250 people, some are still held under the tunnels in Gaza to date. Just when we thought that the ANC would tone down its anti-US messaging, it did the unexpected by dragging the State of Israel into the UN's International Court of Justice (ICJ). Their legal basis was that Israel was committing genocidal acts in Gaza. This act by the South African government would be seen as heroic by some, while others criticised the move because it would not be a viable solution to the longstanding Israel-Palestine conflict. It is possible that the ANC's thinking at the time was to maximise its electoral fortunes, which drastically dropped to below 50%. Their energy on the issue is draining because it is not yielding them the political capital they had planned. If indeed South Africa was genuine about fighting for the rights of the vulnerable people around the world, they could have started with their population, wherein 14 million people are living in dire poverty, not knowing what they would eat the following day. A country where quite a sizable youth are unemployed. The country that experiences 62 murders per day for the whole year, a number that is unmatched throughout the world, we are the murder capital. Still, the political leadership ignores what is affecting their people. Mokgatlhe is a political analyst and consultant.
IOL News
a day ago
- Politics
- IOL News
Bumpy road lies ahead for the nation
President Cyril Ramaphosa and his US counterpart, Donald Trump, met in the While House recently. The US has been very critical of South Africa's foreign policy stance, which, on many occasions, went against the American national interests, according to the writer. Image: AFP September, a month synonymous with renewal and new beginnings, will be the most challenging period in South Africa's political and economic landscape due to actions likely to be taken by the US against the country. The first is the end of the African Growth and Opportunity Act (AGOA), which is set to expire in September. However, the new 30% tariffs introduced by the US for SA will likely override the existing AGOA conventions when they take effect at the beginning of August 2025. The second biggest conundrum will be the possibility of the US Senate's decision on the US-South Africa Bilateral Relations Review Act of 2025. The ground is fertile in the US to act against the South African government, which is believed to have acted against the US's national interests. The US has been very critical of South Africa's foreign policy stance, which, on many occasions, went against the American national interests. This has been evident in their divergent voting patterns on various United Nations (UN) platforms, where South Africa and the US have often taken opposing positions. The relations between the US - SA did not break during the Trump administration, and Joe Biden also raised similar concerns about South Africa. The ANC should be told, 'You made your bed, now lie in it.' They have chosen to strengthen their alliances with the geopolitical rivals to the West at the expense of decades of working partnerships with the Western powers. It was very shortsighted of the ANC to believe that there would not be actions or reactions from the side of the US on how it is being undermined by Africa's powerful regional bloc. The escalating tensions between the US and South Africa took an uphill path in 2022 when South Africa was alleged by the US to have loaded the Lady R with armaments that would be used in the Russia-Ukraine conflict. The South African government dismissed this allegation. In 2023, in the aftermath of Israeli attacks by Hamas on the 7th October 2023, we saw South Africa continuing with its support for Hamas, a designated terror organisation by countries such as the US and European Union (EU) countries. Dr. Naledi Pandor kicked off a diplomatic storm when she agreed that she had a telephonic conversation with the same Hamas and offered them humanitarian support, a vicious group that invaded Israel and killed more than 1 200 innocent civilians and kidnapped more than 250 people, some are still held under the tunnels in Gaza to date. Just when we thought that the ANC would tone down its anti-US messaging, it did the unexpected by dragging the State of Israel into the UN's International Court of Justice (ICJ). Their legal basis was that Israel was committing genocidal acts in Gaza. This act by the South African government would be seen as heroic by some, while others criticised the move because it would not be a viable solution to the longstanding Israel-Palestine conflict. It is possible that the ANC's thinking at the time was to maximise its electoral fortunes, which drastically dropped to below 50%. Their energy on the issue is draining because it is not yielding them the political capital they had planned. If indeed South Africa was genuine about fighting for the rights of the vulnerable people around the world, they could have started with their population, wherein 14 million people are living in dire poverty, not knowing what they would eat the following day. A country where quite a sizable youth are unemployed. The country that experiences 62 murders per day for the whole year, a number that is unmatched throughout the world, we are the murder capital. Still, the political leadership ignores what is affecting their people. Mokgatlhe is a political analyst and consultant.
IOL News
a day ago
- Automotive
- IOL News
US tariffs will test South Africa's economic resilience
The US accounts for 5–6% of South Africa's citrus exports ($100 million annually), supporting 35 000 jobs. The US tariffs are a stress test for South Africa's economic resiliency, says the writer. Image: Doctor Ngcobo / Independent Newspapers On August 1, 2025, the United States will impose a 30% tariff on select South African exports, a move the Trump administration frames as a corrective to "trade imbalances" but which South Africa decries as a unilateral overreach. President Cyril Ramaphosa has rejected the US justification, noting that 77% of U.S. goods enter South Africa duty-free, with an average tariff of just 7.6%. Yet, the policy threatens to derail South Africa's fragile economic recovery, destabilise global supply chains, and escalate protectionist tensions worldwide. This article examines the tariff's sectoral impacts, systemic risks to multilateral trade, and strategic responses to mitigate the fallout. Sectoral impacts: Automative sector South Africa's automotive sector, a beneficiary of the African Growth and Opportunity Act (AGOA), faces existential risk. Reuters reported that the US absorbed 6.5% of South Africa's vehicle exports (worth $1.8 billion in 2024) and is a critical market for manufacturers like BMW and Ford. The 30% tariff could force plant closures and mass layoffs, eroding a sector contributing 5.2% to GDP. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading Agriculture Citrus: The U.S. accounts for 5–6% of South Africa's citrus exports ($100 million annually), supporting 35 000 jobs. Tariffs may cede market share to Chile and Peru. Wine: Producers are scrambling to redirect stock or absorb price shocks, but the U.S. market's premium margins are irreplaceable. Macadamia Nuts and Grapes: High-value perishables face logistical hurdles in pivoting to new markets swiftly. Textile The textile sector may lose competitiveness in the U.S., while aluminium exports face a $534.5 million risk, with 24.6% going to the U.S. Furthermore, the South African Reserve Bank warns of 0.3% GDP contraction and 100,000 job losses. Fiscal strain from reduced export revenues and a weaker rand. The tariffs will disrupt global logistics: Freight bottlenecks: A pre-tariff rush to ship goods to the U.S. has already caused 6–10-week delays on routes like China and South Africa. Cost inflation: U.S. consumers will pay more for South African goods, while businesses face redundant inventory and working capital crunches. BRICS Retaliation: The U.S. has threatened an additional 10% tariff on BRICS-aligned nations, politicising Erosion: Unilateral tariffs bypass dispute mechanisms, undermining multilateralism. South Africa may expand its exports by increasing trade with markets in the EU and Asia. AfCFTA: Boosting intra-African trade as a buffer. The Latest developments: The trade deal reached today (27 July 2025) between the United States and the European Union will ease tariff barriers and improve market access between the two economies. For South Africa, this development could have significant ramifications. First, EU exporters may displace South African goods in U.S. markets, particularly in competitive sectors like wine, citrus, and manufactured components. Second, the EU may divert more of its exports to the U.S., limiting the space for South African exports to expand into Europe. Unless offset by diplomatic interventions and aggressive trade diversification, this deal risks marginalising South Africa in both the U.S. and EU markets simultaneously. To navigate the crisis, South Africa must leverage trade finance tools: Export Credit Facilities: Bridge cash flow gaps for exporters facing margin compression. Risk Mitigation: Insurance products to hedge against payment delays and demand shocks. Market Diversification: Enter new markets (e.g., EU, ASEAN). Local Substitution: Support domestic production to replace costly U.S. imports. Conclusion: The U.S. tariffs are a stress test for South Africa's economic resilience. While the short-term pain is inevitable, strategic diplomacy, trade finance innovation, and market diversification could transform this threat into an opportunity for long-term resilience. The world will watch whether South Africa and the global trading system can adapt without fracturing further. About the Author : Nyaniso Qwesha, MBA, is a trade finance consultant with expertise in global commerce and risk management. He advises clients on trade policy, market access, and financial solutions in emerging economies.
Daily Maverick
a day ago
- Business
- Daily Maverick
With Mcebisi Jonas in limbo, SA is dangerously exposed to false US narratives
New challenges have emerged for South Africa's bilateral relations with the US after the House of Representatives' Foreign Affairs Committee passed a resolution calling for a full review of the relationship, which must now pass the House itself. In this context, and amid the little visible progress made by South Africa's special envoy to the US, Mcebisi Jonas, it is particularly concerning that Pretoria still finds itself without a fully accredited ambassador in Washington. Jonas' appointment was intended to stabilise relations after the dramatic expulsion of Ambassador Ebrahim Rasool before the appointment of a new ambassador. However, while Jonas is an experienced and credible figure, well versed in statecraft and economic diplomacy, even the most qualified envoy cannot act if they are not granted access — and by most accounts, Jonas has been unable to even enter the US. Multiple sources have reported that Jonas was denied a diplomatic visa by Washington, effectively grounding the very individual meant to serve as Pretoria's bridge-builder. US officials have been silent on the matter, while South Africa's Presidency has neither confirmed nor denied the reports, but has insisted Jonas is working 'behind the scenes'. This is useful, but diplomacy does not occur behind closed doors alone; it requires presence, visibility, and access. This is especially true in a place like Washington, where decisions are often influenced through informal networking as much as they are through formal negotiation. At the same time the US-South Africa trade relationship and notably our membership of the African Growth and Opportunity Act, Agoa, which enables exporters preferential access to the US market, is also under threat. The Trump administration has been clear about its intention to impose sweeping tariffs on countries across the board, and signalled that Agoa renewal is by no means guaranteed. Key sectors face potentially devastating consequences. Averting further escalation South Africa has proposed a framework agreement to avert further escalation, but implementation requires intensive, high-level engagement in Washington. The issue is not that Jonas lacks competence, but rather that the current arrangement is structurally flawed. A special envoy denied entry to the country he is meant to engage cannot serve as the country's effective diplomatic point person. This is not a reflection on Jonas, but on the untenability of his position. Pretoria must thus urgently consider appointing a new, formally accredited ambassador to the United States — someone acceptable to Washington, with the diplomatic standing to be received at the appropriate levels, and with the political dexterity to navigate what has become an unusually hostile climate. There is precedent for special envoys playing useful behind-the-scenes roles, but these are typically complementary to, not substitutes for, formal diplomatic channels. South Africa's decision not to rush a new appointment may have been calculated. Given the acrimony surrounding Rasool's expulsion, Pretoria has probably sought to avoid appearing to capitulate or endorse the basis for his removal. But that moment has passed. The longer the post remains vacant, the more likely South Africa's absence is interpreted not as defiance, but as disengagement. Ultimately, it sends the wrong signal to its allies, adversaries, and the South African public. It also leaves South Africa dangerously exposed to narratives it cannot contest in real time. US right-wing media and several lawmakers have infamously amplified unfounded claims of a 'white genocide' in South Africa, which then not only entered mainstream discourse but also shaped US policy, culminating in the recent arrival of Afrikaner 'refugees' in the US. Without a strong and present ambassador to push back forcefully, this kind of distortion risks calcifying into accepted wisdom among Washington decision-makers, with South Africa becoming an ideological talking point in a wider culture war it never intended to join. Beyond managing crises, a new ambassador would also be important in shaping what remains salvageable in the bilateral relationship. The US remains a vital trade and investment partner. And Washington, despite its flaws, is still a power that can make, or break, international norms (at least for now). Pretoria has made clear that it will not be bullied into submission, which is both consistent with the ANC's post-liberation foreign policy and broadly defensible in a world where smaller states must assert their sovereignty. But resistance should not and does not mean retreat — strategic diplomacy requires being both principled and present. Re-engagement with Washington should not have to translate into abandoning South Africa's position on multipolarity or Palestine or its relationship with BRICS+, but does mean ensuring these positions are articulated clearly and defended robustly in the arenas that matter. Right now, that defence is not happening. It cannot happen without someone physically in the room. Good faith If the US administration had no ambassador in Pretoria for six months while threatening trade sanctions, few would interpret it as a gesture of good faith. The same logic applies in reverse. The appointment of a new ambassador won't resolve all points of tension. But it will signal seriousness, restore basic diplomatic protocol, and could help in reclaiming some narrative agency. It would also give South Africa the ability to engage Congress, the State Department, and US civil society on its own terms, rather than as a passive subject of increasingly hostile debate. This is not about capitulation. It is about capacity. Pretoria cannot afford to appear adrift. Now is the time to fill that post in Washington to counter those speaking in our place. DM
