The Trump' administration’s trade tariffs have shaken the rand. Photo: File
The United States’ 30% tariff on South Africa — set to take effect on 1 August 2025 but pushed back seven days — is a grave blow for those diligently modelling costs, yet a distant abstraction for many South Africans who are yet to grasp its economic gravity.
Regrettably, in South Africa global economic shocks typically register as background noise, their causes unexamined, their consequences only recognised when unavoidable. Before dissecting our strategic missteps, let’s make these abstract forces tangible.
Consider first how US President Donald Trump’s threats of tariffs shook the rand’s foundations in July alone. The currency exhibited heightened volatility, opening at R17.59 before plunging 2.6% to R18.04 by month-end, as markets priced in the impending tariffs. Three distinct phases can be identified: the initial 7 July drop to R17.74 (-1%) on Trump’s Brics surcharge threat, a mid-month slump to R17.89 as exemption hopes faded and the final 1.5% 24 to 31 July drop when tariff implementation became certain.
Let’s also appreciate trade and industry in this context. The South African Revenue Service’s Cumulative Trade Report for January to June 2025 revealed that SA exported R68.8 billion worth of goods to the US. Trump’s tariffs will probably disproportionately target critical sectors like vehicles and transport equipment (R11.4 billion); machinery (R3.8 billion); iron and steel products (R10.9 billion); chemicals (R4.8 billion) and plastics (R644 million). Despite exempt categories, such as precious metals and iron ores, several mineral categories will suffer, including processed steel, machinery components and industrial chemicals, risking R31.5 billion in vulnerable exports.
If these impacts remain abstract, consider the tangible consequences — currency depreciation and trade disruptions will send prices of basic goods soaring, devastate jobs in the auto and mining industries, deepen inequality, shutter factories at an alarming rate, fuel inflationary fires and ignite political instability as economic hardship erodes public trust.
Clearly, these repercussions span economic, political and social spheres, raising pressing questions about whether the state could have taken stronger measures to mitigate the coming storm. The evidence suggests decisive action was both possible and necessary.
While competent trade negotiation reflects able governance, truly strategic trade diplomacy remains an elusive art — one whose absence we feel acutely in these turbulent economic waters. A few months back, while Washington’s theatrics over South Africa’s land reform policies dominated headlines, the real tragedy unfolded quietly – that is, the country’s mineral baiting approach to trade talks which ultimately ought to have been seen by our government as doomed from inception.
Why so? Because Trump’s global trade warfare primarily stems from geopolitical anxiety over dwindling US hegemony, not sound economic logic. In such a context, no mineral concessions could sway Washington. Rather than this futile approach, we should have been aggressively pursuing market diversification, accelerating regional industrial partnerships and building shock-absorbent trade architectures.
Far from wishful thinking, this has been a deliberate strategic pivot by pragmatic emerging economies. For example, shortly after Trump announced reciprocal tariffs, Southeast Asian states like Cambodia aggressively diversified trade partners through South-South cooperation and the “China+1” strategy, transforming tariff threats into opportunities. These nations retain their edge as export manufacturing hubs, where labour cost advantages outweigh protectionist headwinds.
Regrettably, this was a storm we might have weathered — had we possessed the strategic foresight to act early. Instead, we’ll spend the coming quarters, perhaps years, paying for missed opportunities, while our trade and diplomatic machinery scrambles merely to recover lost ground.
Siseko Maposa is the director of Surgetower Associates Management Consultancy. The views expressed are his own.