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Los Angeles Times
18-07-2025
- Business
- Los Angeles Times
Trump's pivot from aid to trade leaves Africa wary as it faces tariffs and uncertainty
HARARE, Zimbabwe — When President Donald Trump met five African leaders in Washington in July, his lack of familiarity with the continent was on display. He praised Liberian President Joseph Boakai's English — Liberia's official language — and gestured at another leader to wrap up remarks. But the bigger takeaway was Trump's pledge to transform U.S.-Africa relations: a shift from aid to trade, even as the region reels from steep tariffs and sweeping aid cuts. African leaders offered minerals from manganese to uranium and possibly lithium. Senegal's president even sought to leverage Trump's love of golf by inviting him to build a course. Yet many nations are anxious about Washington's new path. After slashing billions in foreign aid, including shutting down the U.S. Agency for International Development — which provided over $12 billion in humanitarian assistance in 2025 alone — the Trump administration says it is forging a new approach: 'commercial diplomacy.' Trade, not aid, is the order of the day. 'It is now truly our policy for Africa,' said Troy Fitrell, the top U.S. diplomat for Africa, when announcing the strategy in Abidjan, Ivory Coast, in May. Ambassadors will now be judged not by aid projects but on 'how well they support' local businesses and 'how effectively they advocate for U.S. business and the number of deals they facilitate,' he said. Africa accounts for less than 1% of U.S. goods trade, but Fitrell called it 'the world's largest untapped market,' projecting its purchasing power could surpass $16 trillion by 2050. Washington touts quick progress: 33 agreements worth $6 billion in Trump's first 100 days, plus $2.5 billion in commitments at a U.S.-Africa business summit in June. Projects span grain storage and digital infrastructure in Angola, energy ventures in Rwanda, Sierra Leone and Congo, and tourism in Ethiopia. Still, many worry about the costs. Job losses and economic pain from tariffs are mounting even as Washington celebrates these wins. Trump did not invent the idea of trade over aid. African leaders have pushed for this since the 1970s. The problem, critics say, is the caveat: steep tariffs and uncertainty over the African Growth and Opportunity Act (AGOA), the U.S. flagship program for trade with the continent. 'In reality, these tariffs are not about trade balances. It's economic warfare,' said the Alternative Information and Development Centre, a South African NGO. Trump has imposed a 30% tariff on selected South African goods and threatens another 10% for nations aligned with the BRICS bloc of developing economies. South Africa's Automotive Business Council says vehicle exports to the U.S. have plunged over 80%, warning that tariffs 'strike at the heart of South Africa's industrialization agenda.' More than 100,000 jobs, mostly in auto and agriculture, are at risk, the council says. Smaller nations are also reeling. Lesotho declared a state of disaster after being hit with 50% duties — the second-highest rate after China — before Trump announced a 90-day pause. About 12,000 textile jobs hang in the balance, according to Lesotho's Minister of Trade, Industry, and Business Development, Mokhethi Shelile. From vanilla farmers in Madagascar to cocoa growers in Ivory Coast and oil exporters in Nigeria, tariffs have shaken economies and raised doubts about Washington's intent. 'The U.S. certainly can't have it both ways,' said Bester Brendon Verster, an economist at Oxford Economics Africa. 'The 'aid to trade' stance risks leaving Africa behind once the U.S. has gotten what it wanted, which will probably be critical minerals.' AGOA, enacted in 2000 and renewed in 2015, allows duty-free U.S. access for nearly 2,000 goods from 32 African nations. It expires in September, with no clear sign that it will be renewed. South Africa's trade minister warned it will be 'very difficult' to keep AGOA under current conditions. Fitrell said he is a 'big fan' of the deal but told African leaders they must do more to lobby Congress. Future arrangements may require 'much greater attention toward some form of reciprocity' to reflect Trump's push for U.S. economic interests, he said. Meanwhile, China is leveraging zero-tariff policies to expand its influence. In June, China — already Africa's biggest trading partner — said it plans to grant duty-free market access to 53 African nations. Still, Verster said some African nations might be cautious about strengthening ties with China, for fear of triggering retaliation from the U.S. 'Aligning with China … could possibly bring about more economic punishment from the U.S.,' he said. Mutsaka writes for the Associated Press.
Daily Maverick
15-07-2025
- Automotive
- Daily Maverick
Socioeconomic crisis looms as US tariffs hit Eastern Cape's vital automotive industry hard
The Automotive Business Council says it is hopeful that a proposal for 40,000 tariff-free vehicles for export to the US will find favour, as the impact of tariffs in their current form will be catastrophic for both the manufacturing industry and the Eastern Cape. 'This is not just a trade issue, it's a socioeconomic crisis in the making,' CEO of the Automotive Business Council (Naamsa) Mikel Mabasa said on Tuesday. The organisation, like many others in the Eastern Cape, is grappling to come to terms with the devastating impact of export tariffs imposed by the United States. Mabasa said the export tariffs threatened thousands of jobs in the automotive sector, disrupted hard-won industrial capabilities, and risked devastating communities such as East London, where the automotive sector formed the economic heartbeat of the town. He said Naamsa was, however, encouraged by South Africa's early proposals for a quota of 40,000 duty-free vehicle units per annum, 'which would allow us to retain our footprint in this key market'. He said that if the country could not retain export markets such as the US, 'we risk turning vibrant industrial hubs into ghost towns'. Ripple effects through the value chain He said the ripple effects of production loss due to disappearing export markets would be felt throughout the automotive value chain – from component manufacturers to logistics providers, and across the thousands of workers and families who depended on the sector for their livelihoods. 'Export diversification and finding new markets is not something that can be achieved overnight. Our global competitors are already redirecting their exports into markets we traditionally serve. This intensifies the pressure on our original equipment manufacturers (OEMs), who must now absorb rising costs, reduce production, and reconsider future investments,' he said. Urgent diplomacy needed 'We have also taken note of President Cyril Ramaphosa's formal response on the same day, which confirmed South Africa's diplomatic and strategic approach to this matter. He said South Africa's automotive sector was particularly vulnerable to the 25% sectoral tariff imposed under Section 232 of the US Trade Expansion Act of 1962, which specifically targeted automotive exports. This escalation in trade tensions poses a serious threat to one of South Africa's most globally integrated and export-oriented industries. He said the United States had consistently been South Africa's second-largest trading partner and key export destination for South African manufactured vehicles. Agoa at risk – billions in trade and thousands of vehicles 'Since the inception of the African Growth and Opportunity Act (Agoa), the automotive industry has benefited from substantial two-way trade and investment. In 2024, the auto sector accounted for 64% of all Agoa trade between South Africa and the US, generating R28.6-billion in export revenue, with 24,681 vehicles exported to the US under Agoa,' Mabasa said. He said the effect of just the anticipation of the high export tariffs, however, had been devastating to the industry and had an immediate effect on trade performance. He said that even before the formal effect of the tariffs, vehicle exports to the US dropped by 73% in the first four months of 2025, followed by a further decline of 80% and 85% in April and May, respectively. 'This represents a risk of a direct loss of vehicle and component export volumes, and annual export earnings, which would be difficult to recover in the short term,' he said. OEMs under pressure But the news is even worse, he said, as tariff disruptions placed major pressure on [OEMs], who had made long-standing industrial commitments to South Africa and invested significantly in local manufacturing, skills development and export infrastructure. The SA automotive industry contributes 22.6% of the country's total domestic manufacturing output and directly supports 110,000 formal sector jobs. Mabasa said Naamsa welcomed the SA government's continued diplomatic engagement with the US, including discussions held on the sidelines of the US-Africa Summit in Luanda on 23 June 2025, and the submission of SA's Framework Deal on 20 May 2025 to address the concerns raised by the US government. 'We urge both governments to accelerate negotiations toward a balanced, rules-based trade agreement. We are encouraged by early proposals for a quota of 40,000 duty-free vehicle units per annum, which would allow us to retain our footprint in this key market. It's vital that we use this opportunity to preserve the business case for continued investment', he said. Mabasa, however, emphasised the need to prepare for a more uncertain and competitive global landscape. Behind every statistic are people and communities 'Naamsa is equally concerned about the livelihood impact of these developments. Behind every tariff statistic are real people – auto workers, supply chain technicians, logistics operators and their families. Nowhere is this more visible than in East London, a community that has grown and thrived on the back of automotive exports. 'The erosion of this trade threatens to unravel decades of socioeconomic progress. We urge all parties involved in the diplomatic negotiations to recognise the strategic and social importance of safeguarding mutually beneficial trade frameworks like Agoa, and to avoid short-term decisions that carry long-term consequences for vulnerable regions,' Mabasa said. CEO of the Nelson Mandela Bay Business Chamber Denise van Huyssteen, said it was clear that the US trade tariffs, planned for implementation on 1 August, would have a disproportionate impact on the Eastern Cape economy given its high reliance on the automotive sector. 'The initial most vulnerable automotive and components manufacturers will be those who directly export products to the United States. The tariffs will put them in a very uncompetitive position, making it difficult to continue to do trade with the US, which could lead to export orders drying up. This, in turn, will have a knock-on impact on direct and indirect suppliers located in East London and Nelson Mandela Bay, and the overall supporting ecosystem around these manufacturers, who may or may not be able to withstand the loss in volume. 'Additionally, as the volumes, especially of [OEMs], potentially decline, economies of scale are diminished, potentially putting some components manufacturers in a position where they are unable to continue a viable supply to their other OEM customers located elsewhere in the country,' she said. Competitiveness crisis She said the tariff structure also meant that manufacturers who exported products to other parts of the world may now be competing with other countries that had significant cost advantages over South Africa, as they faced lower tariffs or could absorb the tariffs. 'Essentially, the global trade order has been upended, and this is likely to affect global manufacturing footprints and where the best locations will be to produce products in the future,' Van Huyssteen said. She said that switching markets was not a quick solution as these measures took time to implement, and neither would 'replace' current OEMs with new ones. 'On this score, and in order to retain employment, it is vital that any potential incoming OEM investors commit to utilising local components for their manufacturing operations,' she said. Unemployment warning for Nelson Mandela Bay She said the chamber also remained deeply concerned about the devastating impact these 'tariff wars' might have on Nelson Mandela Bay's economy and the thousands of jobs supported directly and indirectly through the automotive industry and its supply chain. 'This, in turn, will add to the already unacceptably high unemployment and poverty levels in Nelson Mandela Bay and the Eastern Cape. It must be remembered that Nelson Mandela Bay is home to the greatest number of automotive component suppliers in the country. Furthermore, 41% of the country's automotive manufacturing employment is based in the Bay,' she said. Call for government urgency 'Given how small SA's economy is, the country's response should not be to retaliate, but rather to look internally and consider deploying incentives to support local manufacturers, rather than to keep others out by way of tariffs. This should also incorporate policy support and assistance in establishing new markets for SA-produced goods.' She called for urgency on the side of the government. 'The government needs to move fast and take action in addressing barriers such as excessive red tape and complex policies associated with doing business in the country. Absolute urgency is required to improve the country's competitiveness versus other emerging locations, which have, over the years, become much more attractive investment destinations. 'These even include some countries on this continent who have surpassed South Africa in some key performance areas. Priority focus must be placed on ensuring that the basic enablers are in place, such as well-maintained infrastructure, efficient logistics and the delivery of basic services at a local municipal level, to help improve the competitiveness of local manufacturers and to sustain their continued operations in the Bay.' MEC warns Mercedes-Benz may exit Speaking at the Finance Committee in the Council of Provinces last week, Eastern Cape MEC for Finance Mlungisi Mvoko said they had held discussions with the Department of Trade, Industry and Competition (DTIC), as the matter significantly affected the Eastern Cape. He highlighted that Mercedes-Benz, currently exporting 90% of the vehicles it manufactures in East London to the United States, was facing the most risk. Mvoko warned that the company might consider withdrawing from South Africa due to the tariff changes. Mvoko said that if Mercedes-Benz were to leave, it would have devastating consequences for the East London Special Economic Zone (SEZ), where many companies existed solely to supply the vehicle maker. He also made it clear that thousands of families in East London and Qonce were reliant on Mercedes-Benz operations. DM
The Citizen
15-07-2025
- Automotive
- The Citizen
Devastating impact of US tariffs on SA automotive sector even before implementation
South Africa's automotive sector already reflects the devastating impact of the US tariffs and a socio-economic crisis in the making. The announcement and anticipation of the US tariffs already had a devastating and immediate impact on trade performance, even before the tariffs were implemented. Vehicle exports to the US dropped by 73% in the first quarter of 2025, followed by a further decline of 80% in April and 85% in May. Mikel Mabasa, CEO of the National Association of Automobile Manufacturers of South Africa (Naamsa), the Automotive Business Council, says this represents a risk of a direct loss of vehicle and component export volumes and annual export earnings, which would be difficult to recover in the short term. And it is not just the export volumes. Mabasa says this is not just a trade issue, but a socio-economic crisis in the making, as the US tariffs directly threaten thousands of jobs in the automotive sector, disrupt hard-won industrial capabilities, and risk devastating communities, such as East London, where the auto sector forms the economic heartbeat of the town. 'If we cannot retain export markets like the US, we risk turning vibrant industrial hubs into ghost towns.' Mabasa says in a press statement that Naamsa noted the official communication from US President Donald Trump to the South African government last week to notify the country of the unilateral 30% reciprocal trade tariff, as well as President Cyril Ramaphosa's formal response that confirmed South Africa's diplomatic and strategic approach to this matter. ALSO READ: How will the 25% US import tariff affect SA's auto industry? Automotive sector particularly vulnerable to 25% sectoral tariff 'South Africa's automotive sector is particularly vulnerable to the 25% sectoral tariff imposed under Section 232 of the US Trade Expansion Act of 1962, which specifically targets automotive exports. This escalation in trade tensions poses a serious threat to one of South Africa's most globally integrated and export-oriented industries.' He says the US has consistently been South Africa's second-largest trading partner and key export destination for vehicles manufactured in South Africa. Since the inception of the African Growth and Opportunity Act [Agoa], the automotive industry has benefited from substantial two-way trade and investment. In 2024, the auto sector accounted for 64% of all Agoa trade between South Africa and the US, generating R28.6 billion in export revenue, with 24 681 vehicles exported to the US under Agoa. The impact is also not on the sector itself, but also on original equipment manufacturers, value chains, and local economy. Mabasa says these tariff disruptions place major pressure on original equipment manufacturers [OEMs], who have long-standing industrial commitments with South Africa and invested significantly in local manufacturing, skills development and export infrastructure. 'The ripple effects of production loss due to disappearing export markets will be felt throughout the entire automotive value chain, from component manufacturers to logistics providers and across the thousands of workers and families who depend on the sector for their livelihoods. ALSO READ: BMW SA 'not exposed' to current US tariff uncertainty Finding new export partners will not happen overnight 'Export diversification and finding new markets is not something that can be achieved overnight. Our global competitors are already redirecting their exports into markets we traditionally serve. This intensifies the pressure on our OEMs, who must now absorb rising costs, reduce production and reconsider future investments.' He points out that the automotive sector is a cornerstone of the economy, contributing an impressive 22.6% to total domestic manufacturing output and directly supporting over 110 000 formal sector jobs. 'The tariffs – and the broader uncertainty in US-Africa trade relations – strike at the heart of South Africa's industrialisation agenda and threaten future investment in high-value manufacturing. They also undermine the significant progress made under Agoa to deepen US-Africa trade.' Mabasa emphasises that Naamsa welcomes government's continued diplomatic engagement with the US, including discussions held on the sidelines of the US-Africa Summit in Luanda in June and the submission of South Africa's Framework Deal in May to address the concerns raised by the US government. 'We urge both governments to accelerate negotiations toward a balanced, rules-based trade agreement. We are encouraged by early proposals for a quota of 40 000 duty-free vehicle units per year, which would allow us to retain our footprint in this key market. It is vital that we use this opportunity to preserve the business case for continued investment.' He says Naamsa continues to engage closely with government counterparts, providing data and strategic insights to support trade negotiations, and is also exploring additional export markets beyond the US urgently. ALSO READ: US tariff of 30% on SA exports: where to now? Time to prepare for more uncertain and competitive landscape in automotive sector Although Mabasa expresses optimism about diplomacy, he emphasises the need to prepare for a more uncertain and competitive global landscape. The US market remains crucial for South Africa, not only for trade flows but also for industrial stability and investor confidence. In addition, Mabasa points out that Naamsa is equally concerned about the impact of these developments on people's livelihoods. 'Behind every tariff statistic are real people – autoworkers, supply chain technicians, logistics operators and their families. Nowhere is this more visible than in East London, a community that has grown and thrived on the back of automotive exports. The erosion of this trade threatens to unravel decades of socio-economic progress. 'We urge all parties involved in the diplomatic negotiations to recognise the strategic and social importance of safeguarding mutually beneficial trade frameworks like Agoa and to avoid short-term decisions that carry long-term consequences for vulnerable regions. 'Naamsa remains deeply committed to South Africa's economic growth and industrial development, and we are optimistic that a constructive path forward will be reached through continued engagement and collaboration.'
IOL News
15-07-2025
- Automotive
- IOL News
South Africa's vehicle exports to US decimated by Trump's tariffs
South Africa's vehicle exports to the United States have dropped dramatically Image: Supplied South Africa's vehicle exports to the United States have dropped dramatically following the imposition of US tariffs, with declines of 73% in the first quarter of 2025, and further falls of 80% and 85% in April and May, respectively. This is according to the Automotive Business Council (Naamsa), which said that the sudden collapse in exports threatens one of "South Africa's most globally integrated industries" and poses a serious risk to jobs, investment. Earlier this year, US President Donald Trump imposed a 25% tariff on all vehicles imported into the US and has since upped the ante on South Africa, informing President Cyril Ramaphosa last week that South Africa will be hit with a 30% tariff on all its exports to the United States from August 1. "The announcement and anticipation of the recent tariffs have had a devastating and immediate impact on trade performance, even before the formal effect of the tariffs," the industry body said. "Vehicle exports to the U.S. dropped by 73% in Q1 2025, followed by a further decline of 80% and 85% in April and May, respectively. This represents a risk of a direct loss of vehicle and component export volumes, and annual export earnings, which would be difficult to recover in the short term". The US has been South Africa's largest trading partner and "key export destination for SA-manufactured vehicles". "Since the inception of the African Growth and Opportunity Act [AGOA], the automotive industry has benefited from substantial two-way trade and investment. "In 2024, the auto sector accounted for 64% of all AGOA trade between South Africa and the U.S., generating R28.6 billion in export revenue, with 24,681 vehicles exported to the United States under AGOA". Naamsa CEO Mikel Mabasa warned that the tariffs are not just a trade issue but a socio-economic crisis in the making. 'This is not just a trade issue - it's a socio-economic crisis in the making. The U.S. tariffs directly threaten thousands of jobs in our sector, disrupt hard-won industrial capabilities, and risk devastating communities such as East London, where the auto sector forms the economic heartbeat of the town. If we cannot retain export markets like the U.S., we risk turning vibrant industrial hubs into ghost towns.' Mabasa said He added that the ripple effects of production loss due to disappearing export markets will be felt across the entire automotive value chain. 'Export diversification and finding new markets is not something that can be achieved overnight. Our global competitors are already redirecting their exports into markets we traditionally serve. This intensifies the pressure on our OEMs, who must now absorb rising costs, reduce production, and reconsider future investments,' added Mabasa. IOL News [email protected] Get your news on the go, click here to join the IOL News WhatsApp channel
The Citizen
08-07-2025
- Automotive
- The Citizen
Trump's new 30% tariff less about trade and more about power
US president Donald Trump followed through on his April threats and hit South Africa with a 30% tariff. Economists say there is not much new about US President Donald Trump's new 30% tariff, which will be levied on all goods imported into the US from South Africa. It is not so much about trade as it is about power. Trump confirmed the move in an official White House letter to President Cyril Ramaphosa and also hinted that a new trade deal could be reached before August. Dr Neva Makgetla and Nokwanda Maseko, senior economists at Trade & Industrial Policy Strategies (TIPS), say there is nothing different from the previous tariff announced in April/May, which reflects a notoriously flawed methodology that has very little to do with the real world. 'In practice, South Africa, like the rest of the world, has already been hit by 25% tariffs on autos, which affect the largest South African export to the US apart from mining products. 'This is perhaps less about trade and more about a show of power. The argument that South Africa imposes unfair trade restrictions on the US is unfounded. If it were, South Africa might have been excluded from the African Growth and Opportunity Act (Agoa) years ago. 'South Africa accounts for less than half a percentage of total US imports, but accounts for about 7% of total South African exports.' ALSO READ: Trump's tariffs affect just a few SA exporters, but will hurt everyone Automotive Business Council still reviewing Trump's letter When approached for comment on the tariff, Mikel Mabasa, CEO of the Automotive Business Council (naamsa), said naamsa is still reviewing the contents of the letter and talking to its members before he will comment. Just after the first announcement in April, Mabasa said the US is the third-largest destination for South African automotive exports, with approximately R35 billion worth of vehicles shipped in 2024, accounting for 6.5% of total vehicle exports in 2024. ALSO READ: Trump tariffs implemented in same week SA citrus growers pack for US export Looming tariff causing uncertainty The tariff will also affect the citrus industry although South Africa only exports about 5% to 6% of its citrus to the US, as many rural communities in the Western and Northern Cape heavily depend on US exports. Dr Boitshoko Ntshabele, CEO of the Citrus Growers' Association (CGA), says the looming US tariff creates great uncertainty among many South African citrus growers. 'It will make South African citrus uncompetitive in the US. The threat of a punitive US tariff means that many of our growers are unable to plan for the entire season, which will only end in October.' Only citrus from the Western and Northern Cape is exported to the US, but entire rural economies, like that of Citrusdal, are sustained by the US export citrus market. Ntshabele says a 30% tariff would wreak havoc on entire communities. 'Producers from the Western and Northern Cape would have little choice but to increase shipments to other countries, rather than face severely diminished returns from the US. This diversion will add to citrus volumes in those other markets, possibly cause an oversupply, which can substantially reduce returns for all South African citrus producers.' ALSO READ: Trump's tariffs pause good news for some but not for SA Mutually beneficial trade deal still possible He says the CGA believes that a mutually beneficial trade deal between South Africa and the US by 1 August is possible or, at least that an exemption for seasonal fresh produce can be negotiated. 'Seasonal fresh produce is not like a product produced year-round in a factory. SA citrus growers do not threaten US citrus growers or US jobs. 'In fact, because we are counter-seasonal, quite the opposite is true. Our produce sustains interest when local US citrus is out of season, eventually benefitting US growers when we 'hand over' consumers at the end of our season.' Ntshabele says with a massive increase in local citrus production projected for the next few years, the local citrus industry can create no less than 100 000 jobs by 2032, but this cannot be done without improved market access and new markets. ALSO READ: Trump's tariffs will override Agoa, hitting automotive sector hardest US trade negotiations will affect GDP forecast Jee-A van der Linde, senior economist at Oxford Economics Africa, says South Africa's existing supply-side constraints will exacerbate the impact of US tariffs on domestic exporters. 'Given South Africa's frail economy, businesses can also ill afford defiant posturing from the government and retaliatory measures are therefore considered unlikely. 'The disruptive and unpredictable nature of US trade negotiations means that our below consensus economic growth forecasts for South Africa will remain unchanged until there is further clarity on US tariffs.' However, he points out that the rand has steadied since the announcement, as markets seem to expect Trump's on-again, off-again tariffs to remain true to form. 'Naturally, the higher tariffs on South African goods will inflict more economic damage than the current rate of 10%, which is burdensome for domestic businesses who have relied on duty-free access to the US for years.' ALSO READ: Trump tariffs created unprecedented uncertainty — trade expert Trump's letter about tariffs both reassuring and concerning George Herman, chief investment officer at Citadel, believes that the letter from Trump about the tariffs is both reassuring and concerning. 'On the positive side, it is encouraging that the update is no worse than what was outlined on 2 April. The vague language also leaves the door open for further negotiations and the original deadline of 9 July has now been extended to 1 August. 'However, it is difficult to see what bargaining power South Africa holds, especially given US Trump's negatively biased view towards SA. President Cyril Ramaphosa immediately responded by refuting claims of the tariffs that South Africa places on the US and urging local exporters to diversify their customer base beyond the US. While strategically sound, this is not an easy shift to make in the short term.' He says it is evident that no real progress has been made in negotiations with the US over the initial 90-day period and this signals a tougher trade environment with the US in future. Herman warns that this can also affect interest rates. ALSO READ: IMF's bad news about economic growth for SA, thanks to Trump tariffs New tariff will have major impact on economy Bianca Botes, director at Citadel Global, also believes the new tariff will have a major impact on the economy. 'Key sectors such as automotive, steel, agriculture and manufacturing will struggle to compete in the US market, which could lead to lower export volumes and job losses, especially in areas that depend heavily on trade with the US. 'With exports expected to decline, gross domestic product (GDP) growth may slow and both businesses and workers could see reduced incomes. This in turn would likely dampen consumer spending and investment. Higher costs, supply chain disruptions and added inflationary pressure may add to the strain.' ALSO READ: US tariff pause ends on 9 July: Tau says what happens now Potential negative economic impact of tariff should not be underestimated Prof Raymond Parsons, economist at the NWU Business School, says the US tariff decision is not good news for the South African economy and its potential negative economic impact should not be underestimated. 'While not unexpected, it creates a challenging economic headwind for SA. For now, the most difficult areas for SA, such as agriculture and cars, remain badly affected unless last-minute negotiations can still ameliorate the outcomes by 1 August. 'The global reality is that the aggressive US tariff policy is creating a fragmented world trading system that further elevates economic uncertainty. While there is a great deal of fear psychology about just now, South Africa is not without remedies. 'As a small open economy, it remains essential that bilateral negotiations must continue to stabilise and consolidate future US-SA investment and trade relations. Collaboration between government and the private sector to accelerate the identification of alternative markets must continue.'
