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IOL News
a day ago
- Business
- IOL News
South Africa braces for job losses as US imposes steep US tariffs on exports
In its South African Macroeconomic Outlook for August released on Wednesday, EY said the agriculture and automotive sectors were expected to be hit the hardest, with key exports like citrus, wine, soybeans, sugar cane, and beef being especially vulnerable. Image: Denzil Maregele/Independent Newspapers Professional services firm, EY, has reiterated the warning that the newly imposed 30% levy on South African exports to the United States could cause around 100 000 domestic job losses. South Africa faces a 30% rate, alongside peers like India (25%), Brazil (50%), Taiwan (20%), Switzerland (39%), Canada (35%), Mexico (18%), and Vietnam (22%). The tariffs, ranging from 10% to 41% on imports from 69 countries and effective from early August, will add to existing duties under Section 232 and the Inflation Reduction Act, overriding prior exemptions. According to the US Trade Representative, these measures signal a long-term pivot toward supply chain realignment and domestic reindustrialisation, unlikely to reverse soon. In its South African Macroeconomic Outlook for August released on Wednesday, EY said the agriculture and automotive sectors were expected to be hit the hardest, with key exports like citrus, wine, soybeans, sugar cane, and beef being especially vulnerable. However, some relief comes from exemptions granted for select products, including critical minerals like platinum group metals (PGM). EY's chief Africa economist, Angelika Goliger, underscored the forward path amid these challenges. "While the tariffs could strain key exports like citrus, wine, soybeans, sugar cane, and beef, exemptions for PGM will provide a buffer, enabling South Africa to pivot toward high-value mineral trade and emerging markets," Goliger said. EY's warning echoes that of the South African Reserve Bank (Sarb) as Governor Lesetja Kganyago in July said the US tariffs on South African products could cause about 100 000 job losses, with the agriculture and automotive sectors hardest-hit. 'If we do not find alternative measures, the impact on jobs could be around 100 000, so that is what we actually face,' Kganyago said during a radio interview. 'The impact in agriculture could actually be quite devastating because agriculture employs a lot of low-skilled workers, and here the impact is on citrus fruit, table grapes and wines.' These estimates are higher than the recent job losses forecast from the Department of Trade, Industry and Competition (the dtic) as it only foresees at least 30 000 job losses from the projected figures. Last week, the dtic director-general Simphiwe Hamilton said they based this estimate on the ongoing consultations they have with all the sectors of the economy — from automotive, agriculture and all the other sectors that are going to be impacted. 'At this stage we are sitting at approximately 30 000 jobs that could be affected by this, if it were to be mismanaged in any manner,' Hamilton said. South Africa will be submitting a revised offer for a trade deal to Washington in a bid to lower the 30% tariffs while also looking at diversifying into Asian and African markets. The dtic has also established an Export Support Desk, which will serve as a direct point of contact for companies affected by the US tariff hike. EY's analysis projects that while short-term disruptions may weigh on growth, strategic shifts could enhance long-term competitiveness. With PGM exempted, EY said the mining sector stands to benefit from sustained investor interest in critical minerals essential for green technologies. EY said agriculture and automotive firms, however, will need agile adaptations, such as supply chain rerouting and innovation in sustainable practices, to thrive. "Looking ahead, the government's proactive Export Support Desk will be crucial in guiding businesses toward diversification, potentially unlocking new opportunities in Asia and the EU to offset US market losses," Goliger said. "These measures will not only cushion immediate impacts but position South Africa for stronger, more resilient trade networks in a post-tariff world. By accelerating diversification, we could see a rebound in export volumes within 12-18 months, particularly if global commodity demand stabilizes amid US-China tensions." BUSINESS REPORT
IOL News
2 days ago
- Business
- IOL News
South Africa presents revised trade offer to the US amid tariff concerns
Minister of Trade Industry and Competition (the dtic), Parks Tau, speaking during a joint media briefing on Tuesday about South Africa's trade negotiations with the United States. Image: GCIS Banele Ginidza South Africa on Tuesday submitted a revised offer to the trade negotiations with the United States (US), which it described as broad, ambitious and likely to meet the demands of that country as it looks for means of allaying the 30% tariffs imposed last week. In a joint presentation, Minister of Trade Industry and Competition (the dtic), Parks Tau, alongside Minister of Agriculture John Steenhuisen said the new offer substantively responds to the issues the US has raised in the 2025 National Trade Estimates Report and builds on the previous offer submitted in May. "This is a broad, generous and open offer that I think meets the ambition criteria, if you are to look at the trade and tariff perspective it represents something that will be good for the US and also for SA," Steenhuisen said. "We hope it will be received this way in the US, obviously, the demands both in meetings with the Trade Representative and at the White House the focus was on the trade and tariffs not on domestic policy issues outside." The ministers said South Africa has already addressed sanitary and phytosanitary measures in compliance with the bio-security protocols affecting poultry, blueberries and pork with the first shipment of meat products expected in South Africa shortly from the US. They said the measures will ensure that the US is able to leverage the Tariff Rate Quota of 72 000 tons already agreed in 2016. They also said a high-level negotiation team, including both the dtic and the agriculture department has been identified and was ready to engage the US towards a mutually beneficial agreement. "Our goal is to demonstrate that South African exports do not pose a threat to US industries and that our trade relationship is, in fact, complementary," the ministers said. "While the US is our 3rd largest trading partner after the EU and China, South Africa is the 43rd export destination for the United States and accounts for 0.25% of total US imports and is therefore not a threat to US production." 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. 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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. Next Stay Close ✕ They said as the US market accounted for about 4% of South Africa's total agriculture exports, or R9.8 billion of total agricultural exports, an increase of 104% from 2018. "The government is going to do everything possible to keep the American market open for our goods. We will at the same time accelerate our efforts to diversify markets and build on the efforts we have put in place to ensure predictability in trade and leverage all our existing partnerships to secure markets for our products," they said. Another significant request from the US was that South Africa consider reducing tariffs as a way to address the deficit and tariff disparity with the European Union due to the SADC-EU Economic Partnership Agreement." Tau also announced that consultations were under way with industry and members of the Southern African Customs Union (SACU) regarding ways to respond to a request from the US for South Africa to consider reducing tariffs as a way to address the deficit and tariff disparity with the EU due to the SADC-EU Economic Partnership Agreement. Tau said South Africa has accelerated its diversification efforts of export markets and enhanced competitiveness to mitigate the economic impact of losing preferential trade access. The diversification is a strategic imperative to ensure better resilience of our economy to economic shocks. "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," Tau 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."
IOL News
05-08-2025
- Business
- IOL News
South Africa eyes diversification as jobs exodus looms over 30% US import tariffs
Zane Dangor, the Director-General (DG) of the Department of International Relations and Cooperation (Dirco), speaking with Simphiwe Hamilton, the director-general of the Department of Trade, Industry and Competition (the dtic) during a press briefing led by Ministers Ronald Lamola and Parks Tau on the reciprocal US tariffs. Image: GCIS Banele Ginidza About 30 000 jobs in various sectors are likely to be impacted by the unilateral 30% import tariffs to be imposed by the United States on South African products, which is set to come into effect before the end of this week. This was announced on Monday as the government seeks to craft an export diversification strategy leaning heavily towards China's R20 billion market through the offered China-Africa Trade partnership and a special industrialisation memorandum of understanding exclusively with South Africa. Simphiwe Hamilton, the director-general of the Department of Trade, Industry and Competition (the dtic), confirmed that thousands of jobs were on the line in a variety of industries that export goods to the US market. 'We base this on the ongoing consultation that we have with all the sectors of the economy, from automotive to agriculture, and all the other sectors that are going to be affected, and at this stage, we are sitting at approximately 30 000 jobs that could be affected by this,' Hamilton said. 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 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. Next Stay Close ✕ The dtic and the Department of International Relations and Cooperation (Dirco) said the 20% increase on top of the basic 10% tariff may shave off 0.2% of South Africa's economic growth, with the reduction in growth depending on SA's ability to find alternative markets. Trade Minister Parks Tau said it was mildly comforting that 35% of SA exports remained exempted from the tariffs with the exceptions published in the previous US Executive Order to remain in force. The exceptions cover products such as copper, pharmaceuticals, semi-conductors, lumber articles, certain critical minerals, stainless steel scrap, energy and energy products. Tau said the impact of the tariff was still subject of scrutiny with various conclusions, citing AgriCulture South Africa reporting an understated impact than initially modelled. "Drawing a straight line is a mistake we all have been making over the past few months when we are saying the auto sector is going to be affected and can't export to the US market," Tau said. "But when you drill down to the detail, most of the Original Equipment Manufacturers (OEMs) in the country do not go into the US market. So you have to go to the OEM that goes into the US market to determine what percentage of products [is exported to the US] to then determine impact. Last month, US President Donald Trump stated that the 30% tariff was "necessary to correct the many years of South Africa's Tariff, and Non Tariff, Policies and Trade Barriers," blaming Pretoria for what he called "unsustainable Trade Deficits against the United States." However, Tau and Dirco Minister Ronald Lamola said the calculation of US-SA "trade deficit" ignored the substantial US trade surplus in services, as well as the complementary nature of the bilateral trade and investment relations between the two countries. "South African exports do not compete with US producers and do not pose a threat to the US industry," they said in a joint statement. As a result, the government has embarked on the diversification of markets and strengthening trade and investment partnerships with various trade partners, targeting markets across Africa, as well as in Asia, Europe, Middle East, and Americas. "Our announcement on the Clean Trade and Investment Partnership with the European Union in March has unlocked a R90 Billion Investment Package that has been initially committed," read the statement. "This Clean Trade and Investment Partnership also aims to unlock new market access opportunities for South Africa, including the export of Sustainable Aviation Fuel (SAF) by Sasol and the exports of hybrids and Electric Vehicles. "While facing global trade challenges, South Africa is proactively building a more resilient agricultural sector. We've made significant progress in opening up vast new markets like China and Thailand, securing vital protocols for products like citrus and others." The government said that with China alone being a $200bn market, South Africa was confidently expanding its reach and creating new opportunities for agricultural producers. "We're making significant inroads into new, high-growth markets across Asia and the Middle East, including the UAE, Qatar, and Saudi Arabia. We have also developed a number of Trade and Investment Packages with a number of countries, including Japan that aim to unlock new market access opportunities," it said. "While the current measures present challenges, it also presents opportunities to build and accelerate the implementation of the African Continental Free Trade Agreement and to develop new partnerships in markets that have remained untapped, including ASEAN and Turkiye." BUSINESS REPORT
IOL News
04-08-2025
- Business
- IOL News
Business Leadership SA calls on Ramaphosa to establish trade crisis committee amid US tariff hike
Business Leadership South Africa has urged President Ramaphosa to establish a trade crisis committee in response to the steep US tariff hike, warning of the potential impact on jobs, investment, and economic stability. Image: Mandel NGAN / AFP In response, the DTIC describes the Export Support Desk as a vital lifeline for exporters navigating the fallout from the escalating trade tensions. "The Department of Trade, Industry and Competition (the dtic) has established an Export Support Desk, which will serve as a direct point of contact for companies affected by the U.S. tariff hike," the department said. "Exporters are encouraged to engage directly with the Export Support Desk and also to visit the dtic website regularly for updates and support mechanisms". Meanwhile, Business Leadership South Africa CEO Busisiwe Mavuso has called for President Cyril Ramaphosa to establish a dedicated trade crisis committee to coordinate the country's response to the looming US tariffs. "A standing crisis committee, consisting of business leaders and government officials from key departments, should be established to ensure rapid information flow and coordinated efforts,". Mavuso said. "I encourage the president to establish a Trade Crisis Committee that brings together business leaders and key government officials to jointly chart a path forward. This committee must include National Treasury. We already have proven crisis response tools that were developed for Covid-19 and the 2021 KwaZulu-Natal unrest" IOL News [email protected] Get your news on the go, click here to join the IOL News WhatsApp channel
IOL News
04-08-2025
- Business
- IOL News
South Africa's response to US tariffs
These urgent interventions are part of the dtic's ongoing commitment to protecting jobs, preserving market access in the United States, and promoting export diversification to alternate markets in Africa, the EU, Asia, Latin America, and other strategic partners. Last week, the dtic announced a set of measures in response to the imminent 30% tariff hike on South African exports to the United States, which comes into effect this month. The Departments of Trade, Industry and Competition (dtci) and International Relations and Cooperation (Dirco) are hosting a briefing on the United States' reciprocal tariffs that are being imposed on South Africa. In his weekly letter to the nation, President Cyril Ramaphosa noted that South Africa is grappling with the United States' decision. However, he insists the country is not alone in facing mounting global trade challenges. "Our trade relations have historically been complementary in nature. South African exports do not compete with US producers and do not pose a threat to US industry. It remains our aspiration that this should continue. "Largely, our exports are inputs into US industries and therefore support the United States' industrial base. South Africa is also the biggest investor from the African Continent into the US, with 22 of our companies investing in a number of sectors including, mining, chemicals, pharmaceuticals and the food chain," he said. Ramaphosa added that it is important to understand that South Africa is not alone in facing high tariffs from the US. "A number of export-reliant developed and developing economies, including several on the continent, are also grappling with these measures," he stated. IOL
