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)
Economists have said that South Africa’s economy is likely to suffer if the 30% import tariff on local goods, announced by United States President Donald Trump this week, kicks in on 1 August.
Trump said this week that the tariff is meant to address the trade imbalance between South Africa and the US. It “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”.
South Africa is one of 14 countries that have received formal communication from the US regarding proposed tariff increases.
Trump first announced the tariffs in April, but he decided to put them on hold for three months to give countries a chance to negotiate better terms with the US.
In his latest communication to South Africa, Trump 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 said the 30% tariff is based on a particular interpretation of the balance of trade between South Africa and the US, and it would 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,” Vincent Magwenya, the presidency spokesperson, 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.
South Africa’s single 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 are going to be imposed or where exemptions are going to 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 GDP expanded by a marginal 0.6% in the last three months of 2024, following 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.”
Presidency spokesperson Magwenya said: “South Africa will continue with its diplomatic efforts towards a more balanced and mutually beneficial trade relationship with the United States. We welcome the commitment by the US government that the 30% tariff is subject to modification at the back of the conclusion of our negotiations with the United States.”
President Cyril 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.