US President Donald Trump said this week that the tariff is meant to address the trade imbalance between South Africa and the US. (Photo: Evan Vucci/AP/picture alliance)
South Africa’s economy is likely to take a knock if the 30% import tariff on local goods announced by United States President Donald Trump this week kicks in on 1 August, economists have said.
South Africa is one of 14 countries that received formal communication from the US earlier this week regarding proposed tariff increases. Tunisia is the only other African country targeted.
Trump said the tariff will address what he called a trade imbalance between the US and South Africa, which he said “must move away from these long-term, and very persistent, trade deficits engendered by South Africa’s tariff, and non-tariff, policies and trade barriers”.
Trump announced punitive tariffs against several countries in April, but decided to put them on hold for three months so that countries could try to negotiate better terms.
In his latest communication to South Africa, the US leader said: “Our relationship has been, unfortunately, far from reciprocal. Starting on August 1, 2025, we will charge South Africa a tariff of only 30% on any and all South African products sent to the United States, separate from all sectoral tariffs.”
The South African government says the 30% tariff is based on a disputed interpretation of the balance of trade between South Africa and the US, and it will try to negotiate better terms with Washington.
“This contested interpretation forms part of the issues under consideration by the negotiating teams from South Africa and the United States. Accordingly, South Africa maintains that the 30% reciprocal tariff is not an accurate representation of available trade data,” the presidency said in a statement.
“In our interpretation of the available trade data, the average tariff on imported goods entering South Africa stands at 7.6%. Importantly, 56% of goods enter South Africa at 0% most favoured nation tariff, with 77% of US goods entering the South African market under the 0% duty.”
The presidency said Pretoria would continue “with its diplomatic efforts towards a more balanced and mutually beneficial trade relationship with the United States”.
South Africa’s biggest exports to the US are mining ores and metals, followed by machinery and transport equipment and vehicles.
George Herman, the chief investment officer at Citadel, said that although the full details of how the new tariffs will be imposed or where exemptions will be applied were not made public, “the automotive, wine and citrus industries are likely to be hardest hit, particularly as they could move from zero tariffs to a steep 30%”.
South Africa’s agriculture industry says the tariffs will affect fresh produce exports, particularly citrus, macadamia nuts, wine, fruit juice, ice-cream and table grapes.
The National Agricultural Marketing Council said the country’s agricultural exports in 2024 reached a new record of $13.7 billion, or R251 billion, up 3.6% from $13.2 billion (R244 billion) the year before.
Grapes are South Africa’s biggest product exported to the global market in 2024, followed by maize, oranges, mandarins, apples, wine and lemons.
“[The tariff] presents a bit of a curveball for the agricultural sector in South Africa’s context,” said Brendan Jacobs, head of agribusiness at Standard Bank.
He said the export value to the US should be viewed relative to what the country sells to the rest of the world.
At 44%, Africa accounts for almost half of South Africa’s agriculture exports in value terms, followed by Asia at 19%, and the European Union at 21%. The Americas account for 6%, with the US being the largest, data from the marketing council shows.
“This aligns the importance of export diversification towards other areas such as the Middle East, Far East, Europe and the rest of Africa,” Jacobs said.
The agriculture department noted the effect the tariffs will probably have on the industry, including job losses, saying it would seek “constructive dialogue” with the US.
“As part of the strategy, the department of agriculture is continuing engagements with trade partners and exploring other avenues in new and emerging markets,” Minister John Steenhuisen said.
In a separate statement in his capacity as leader of the Democratic Alliance, Steenhuisen said in a somewhat blunt tone that the tariffs would have “devastating” consequences for South Africa.
“Whilst not explicit, the announcement would signal the end of the African Growth and Opportunity Act [Agoa], which gives South Africa duty-free access to the US for more than 6 000 products, including goods in the automobiles, agriculture and textile industries,” he said.
Agoa expires in September. African countries have been lobbying for a 10-year renewal. Regardless, South Africa was already at risk of being kicked out of the pact given tensions that have flared up with the Trump administration this year.
South Africa’s vehicle industry will also be heavily subjected to the tariffs, said Renai Moothilal, the chief executive of the National Association of Automotive Component and Allied Manufacturers.
He noted that in 2024, the country exported R24 billion worth of vehicles and R4.3 billion of components to the US.
The US is South Africa’s second-largest export market for vehicles after Germany.
Although the tariffs will hurt the competitiveness of local companies which need to trade components and vehicles freely into the US market, the immediate effect will be on the US, said Moothilal.
“It can take 12 to 15 months for US importers to change their supply of components. This means that for at least the short term, the US will need to absorb the 25% price increase, ultimately causing inflation in the US.”
South Africa’s vehicle exports will probably be hit in the immediate future, he said. “This will be determined by the OEMs [original equipment manufacturers] on whether to continue exporting to the US from SA, and if US consumers are willing to pay more for the specific vehicles coming out of SA, or any other destination, given the widespread global application of tariffs.”
“Over the long term, if the US market remains inaccessible, then you will see a loss of production volumes in SA for some OEMs and component suppliers that were previously exporting to the US.
“This will harm employment and investment and impact the competitiveness of the sector, which is heavily dependent on the economies of scale it generates through a combination of domestic and export production,” Moothilal added.
“And with these tariffs overriding Agoa benefits, this will negatively impact future investment decisions.”
South Africa’s GDP expanded by a marginal 0.6% in the last three months of 2024, after a 0.1% contraction in the previous quarter, largely driven by growth in the agricultural sector. But economists are concerned about the downside risks of the tariff hikes to an already struggling economy.
Standard Bank had expected the economy to grow by nearly 2% this year, but problems, ranging from the initial tariff hikes and the associated policy uncertainty to weather disruptions such as floods and struggles earlier this year in passing the budget, have seen it trim this to just more than 1%, said Elna Moolman, the bank’s head of macroeconomic research.
“Should the 30% tariff hikes on South African exports to the United States be implemented, even 1% would be hard to reach and it could, depending on the extent of any exemptions, even negate the growth improvement that is widely expected from last year’s weak growth,” she said.
Based on rough estimates from existing export volumes to the US, a reduction in trade could cut South Africa’s GDP growth by up to 0.5%, Citadel’s Herman said.
“With the economy already forecast to grow by only about 1% this year, this would represent a significant blow.
“From a financial market perspective, risk premiums have largely been priced out, as investors anticipate that interest rate cuts will help cushion the impact. However, this optimism may be misplaced,” he said.
“Persistent economic headwinds and the compounding effect of elevated tariffs could dampen global growth and create a more difficult environment in the months ahead.”
Ramaphosa has called on government trade negotiations teams and South African companies to diversify trade relations to promote better resilience in both global supply chains and the local economy.
But economists say more reforms are needed to boost the economy, including policy intervention.
“In our view, while 2025 growth will be weaker than originally envisaged owing to a range of headwinds, including US tariffs on SA and other countries’ exports, trend growth should ultimately still improve if policy reforms continue,” Standard Bank’s Moolman said.
*This story has been updated with additional comment.