Both the US and China have already issued counter warnings to would-be double-dealers who might wish to strike trade deals at the expense of each other’s interests.
The global trade handbook has been thrown out of the window right before our eyes, threatening to unravel the world economic order and fragile economies like South Africa.
President Donald Trump’s broad swathe of so-called reciprocal tariffs against the US’s major trading partners, however flawed they are, have put South Africa in a tricky position, not only because of the “twisted”, tense diplomatic relations between the two countries but, crucially, because it is highly integrated into global supply chains and financial markets.
Small economies often become collateral damage during trade wars, enduring unprecedented capital flight and currency crises. As trade intersects with politics, small economies are easily trapped in the powerplay between superpowers with the risk of affixing their political interests to global supply-chain networks. Both the US and China have already issued counter warnings to would-be double-dealers who might wish to strike trade deals at the expense of each other’s interests.
A trade war between either of South Africa’s key trading partners, through tariffs or export controls and other non-tariff barriers, would constrain domestic supply capacity to global markets while causing a cacophony of macro-economic risks.
A 145% tariff on Chinese exports to the US and vice versa would indirectly increase the price of tradable products made of raw materials from South Africa. Price increases are not limited to the two superpower rivals but affect the rest of the world due to supply-chain disruptions and the vulnerability of lower-scale economies.
Sensing the risk of global economic decline, manufacturers scale down production and put expansion plans on hold while financial markets jitter and ultimately resort to safer assets. People lose jobs and inflation erodes consumer spending, leading to prolonged economic turmoil. The scale of the contagion or destruction is unimageable.
In the past, some countries have become involved in combat over trade disputes. When mighty Britain could not find a market for its cotton in China, because of the cultural preference for silk, to balance the large trade deficit on tea imports (and other luxuries) in the mid-1800s, they sought to increase the export of opium to China. This was despite strict prohibitions to which the colonial power responded with military force, forcing China to allow opium trade, grant favourable trade terms and cede territories.
The enactment of the Smoot Hawley Tariff Act in the 1930s to protect US farmers and manufactures against European competitors provoked retaliatory tariffs from affected trading partners, exacerbating the Great Depression.
Nationalists purportedly took advantage of the socio-economic discontent to mobilise public support for totalitarian regimes, such as Nazi Germany. It is for these reasons that the General Agreement on Tariffs and Trade (which later became the World Trade Organisation) was introduced in 1947 to corral countries against rising protectionism and provide an institutional framework for open, stable and predictable trade relations.
These examples underscore an important message in Chinese President Xi Jinping’s recent editorial, published widely in the Asian media: “No one wins in a trade war.” This is especially true of “innocent bystander” countries who lack the wherewithal to cushion themselves against the inevitable economic meltdown they engender.
South Africa is not a big party to the US-China trade war, despite having been slapped with a 30% sanction by the US, disguised as a tariff, ostensibly for violating Afrikaner human rights and undermining US-Israel foreign relations. The volume of trade between the two countries amounted to $20 billion in 2024, with South Africa enjoying a trade surplus mainly from export of raw commodities, semi-finished goods, motor vehicles and agriculture products.
US imports to South Africa mainly consist of high-value manufactured goods, including aircraft, chemicals and pharmaceuticals.
South Africa’s focus on the export of unfinished goods, and the fact that the country’s exports constitute less than a quarter of percent to total US imports, makes it vulnerable to unilateral trade bullying and an insignificant threat to the US. This proves the ineffectiveness of the tariff penalty and protectionism agenda.
On balance, the US enjoys favourable trade benefits from South Africa because of its diverse imports and low-to-no tariffs on US imported goods, just as selected products from South Africa benefit from the African Growth and Opportunity Act duty-free deal.
Counter tariffs are likely to harm the South African economy as many of the imports are intermediated products used in the local production of goods destined for other international markets. If the trade war persists, South Africa will probably face double jeopardy against which there is no plausible immediate remedial action.
In contrast, South Africa has enjoyed stable economic and diplomatic ties with China, with bilateral trade increasing from $1.3 billion in 2000 to $37 billion in 2025, despite the large, and growing, trade imbalance of $20 billion against South Africa.
Exports to China are heavily dominated by raw minerals and metals, while imports span electrical machinery, electronics, apparel and vehicles.
Both countries have sought to deepen economic integration outside of trade, with China investing in mining, infrastructure, renewable energy and hi-tech manufacturing.
Unlike with the US, South Africa and China continue to use diplomacy to resolve disputes and promote mutual economic interests. President Xi and Foreign Minister Wang Yi have visited South Africa in recent years. When Pretoria raised concerns about the skewed trade balance with China at the 2024 Forum on China-Africa Cooperation, Beijing swiftly elevated bilateral ties to a “new era all-round strategic partnership”, promising to assist with unlocking energy and logistic constraints and to strengthen cooperation in scientific advances, artificial intelligence and the digital economy.
But trade diplomacy, however noble its intentions, leaves South Africa in no better position than the blatant tariff war. Agreeing to unfettered trade relations with a global manufacturing and export-oriented giant could negatively affect the market for locally manufactured household goods, for example, causing job losses and contraction of the economy’s productive sectors.
In 2006, former president Thabo Mbeki warned that, in its relationship with China, Africa must guard against becoming a supplier of raw materials in exchange for manufactured goods. In the same year, South Africa and China signed an agreement restricting the import of Chinese textiles for three years. This was after 63 000 jobs were lost in the local clothes manufacturing sector.
The local steel industry is crumbling under pressure from Chinese competition, with mills threatening closure. Chinese auto manufactures are gaining a foothold in South Africa, not only outcompeting locally-assembled brands but also hurting the export of locally produced combustion-engine vehicles to the West as the global demand shifts to EVs.
The rise of global ecommerce, including fast fashion, drop-shipping and express logistics, puts added pressure on the tiny local household goods manufacturing industry and retailers as thousands of small-scale manufacturers in China take advantage of eased access to global markets.
It turns out that South Africa’s export prospects and global trade standing are in jeopardy, irrespective of the tariff war. Turning to Brics for new markets seems improbable as Russia is under global sanctions, while India’s new steel tariff against China signals multilateral discord, in the wake of reestablished warm ties between New Delhi and Washington.
The African Continental Free Trade Area provides a glimmer of hope for new market development, however, this too cannot be achieved overnight because of limited demand for South Africa’s trade structure and weak intercontinental trade. Lamenting the lack of agency and the flagrant distrust between nations, the secretary general of the area HE Wamkele Mene noted that African countries still spend $50 billion annually on grain imported from outside the continent, even when it is available continentally.
This calls for a modified playbook of the kind which led to China’s rapid economic transformation — an inward-looking, growth-oriented strategy with emphasis on infrastructure investments; research and development (reverse engineering) and rebuilding or strengthening light and advanced industrial capabilities.
The formula is easy but requires patience, discipline and, most importantly, political certainty. To a certain extent, the targets have been set but they stop short of the commitment needed to follow through. Global trade competitiveness cannot be regained or achieved overnight. Equally, diplomacy is not tradable and futile if not backed by a demonstrable set of locally produced, globally sought after, high-value products.
Eddie Rakabe is a researcher at the Mapungubwe Institute for Strategic Reflection. These are his views.