US President Donald Trump. Photo: Supplied
The Trump administration’s trade tariffs are illegal and fall outside the legal framework of international trade law. South Africa should call out the US government for violating basic principles of international law
South Africa is subject to a 30% US tariff rate, announced during the so-called liberation day tariffs declaration on 2 April, and will take effect from 1 August. The South African economy is likely to be significantly affected by these tariffs, particularly the agricultural sector and vehicle industries. The specific regions that will be affected are the Eastern Cape vehicle corridor and citrus fruit small towns in the Western cape.
The tariffs are eroding the rule-based international trade order by unilaterally imposing tariffs to balance American trade deficit with its trading partners. The United States, being one of the chief architects of the international trade system is now questioning the benefits of the rule based global trade order.
The first assault of the global trade order was in 2017, when the US, under Trump, started blocking all new appointments to the World Trade Organisation (WTO) appellate body as the terms of its Judges were expiring. Trump started his trade war with China in early 2018, when he started setting tariffs and other trade barriers against China.
Breach of the WTO rules
Trade within the auspices of the WTO is rules-based and has been a source of international economic stability and success in many of the world’s economies. Established through the General Agreement on Tariffs and Trade (GATT) of 1948 and subsequently the WTO in 1994, the rules-based international trade law has been founded on what is known as diffuse reciprocity. Diffuse reciprocity essentially negates formal numerical equality in tariffs within the context of the global trade system. This is because reciprocal tariffs are a fundamental rejection of the WTO rules.
Throughout the years, the international trade system has been based on the principle of non-discrimination amongst the member countries of the WTO. Non-discrimination principle promotes universal equal treatment between the WTO member countries. This trade without discrimination is known as the Most Favoured Nation (MFN) Treatment. The MFN is the first article of the GATT agreement, which regulates trade in goods. It requires a nation providing a trade concession to one trading partner to extend the same treatment to all. Therefore, countries cannot discriminate between their trading partners.
For example, if country A offers a lower custom duty rate to country B, it has to extend the same treatment to others. Similarly, if a country imposes additional restrictions on the WTO member nation, it must do the same to all the other trading partners. A Generalised System of Preferences (GSP), Free Trade Agreements and Customs Union are some carve outs and exceptions to the MFN principle. For instance, the African Growth and Opportunity Act (Agoa) is an exception to the MFN rule under the WTO legal Framework. But it should be noted that although South Africa’s membership in Agoa gives preferential access to the US market, economists have said that only 20% of our exports constitute the Agoa export. Therefore, most of the country’s exports are not under the Agoa preferential access.
Beginning on 1 August 2025, the US will continue to violate Article I of the GATT by unilaterally imposing 30% reciprocal tariffs on the South African government. For example, while the Indian exporters will now face 20% US tariffs, South Africa’s exporters will face 30% tariffs on the same products.
The US is also in breach of its commitment under Article II of the WTO’s GATT agreement, which deals primarily with the schedule of concessions. This provision details the tariffs commitments the WTO member states have made to other countries. It mandates the WTO member countries to provide treatment not less favourable than the one provided under its schedule of concessions, including adhering to bound tariffs that a country has committed itself to.
By unilaterally imposing reciprocal tariffs that are not agreed to by other member states of the WTO, the US violates its legal commitment that it has made under Article II of the WTO’s GATT agreement. While the US is permitted under Article XX VIII of the GATT to unilaterally modify its tariff commitment under international trade law, this approach requires a negotiated compensation with the affected member states. The Trump administration has not adopted this approach.
Furthermore, the reciprocal actions also undermine the WTO law principle of special and differential treatment accorded to least developed and developing countries, to which South Africa is one of them. The rationale behind the special and differential treatment principle is to allow least developed countries and developing countries to provide less than full reciprocity in their tariff obligations to developed countries.
Criticism of the US reciprocal tariffs
Many countries have criticised the US reciprocal tariffs for violating basic principles of international trade. China has openly criticised the US government saying that the US move disregards the balance of interest reached in multilateral trade negotiations over the years and the fact that it has long benefited greatly from international trade. China has instituted a WTO case against the US for breaching of its WTO obligations.
The second critic of Trump is the Singaporean government. The country’s prime minister recently remarked that the US appears to be withdrawing from the global leadership to a less predictable international trade system and the messier world. He said the era of rule- based globalisation and free trade is over. He has labelled the US new tariff regime as a repudiation of the MFN principle.
Likewise, the Canadian government has challenged the legality of the US tariffs. It has retaliated to the US tariffs by imposing 25% tariffs on $30 billion of US imports and has plans to expand to $155 billion after consultation. In addition to this, Canada has filed a legal claim against the US by requesting WTO dispute consultations with the US concerning the imposition by the US of import duties on certain steel and aluminium products from Canada. The initiation of this dispute has been circulated to all the WTO member countries.
The actions by these countries are justified. The US government should be held accountable for its erosion of international trade rules. The South African government has not condemned the Trump administration for its violation of international law; it has instead insisted on one-sided attempts to negotiate trade deals with the US government. South Africa’s position therefore does not explicitly express its discontent with the US illegal tariffs, but it is hoping that its negotiation will yield some trade deals with the US. One wonders if the results of that trade deal itself will be compliant with the WTO trade rules, but this will be seen once the US tariffs decision on South Africa has taken effect.
The South African strategy
On 7 July, the South African president issued a statement attempting to push back on Trump’s imposition of 30% tariffs, saying that they are an inaccurate view of US-South Africa’s trade relations. He has argued that these tariffs are not an accurate representation of available trade data.
But this is not enough. South Africa appears to be hesitant to publicly call out the illegal tariffs of the US government, possibly because such public condemnation of Trump tariffs would not be in the interests of South Africa.
According to the joint statement by the ministers of international relations and trade, industry and competition, South Africa is seeking to secure favourable quota agreements and additional exemptions by ensuring that its industries still maintain access to the US market including sectoral cooperation. The joint statement has reiterated that the country is committed to the mutual beneficial trade relationship between the US and South Africa. Instead of calling the tariffs illegal and against international trade law, the joint statement expresses concerns over shared prosperity between the two nations and it acknowledges these tariffs as constituting barriers to trade.
Other countries have continued to negotiate with the US government on this tariff issue while taking it to the WTO dispute settlement system. If South Africa were to take a similar approach, it would continue to negotiate with the US government while reminding it of its commitment to the global trade rules. Perhaps the South African government might argue that this will not yield any results, given that the WTO settlement body is dysfunctional.
The other impediment is that the appellate body of the WTO is not currently functional, because the US has blocked the appointment and reappointment of its judges. But China and Canada have continued to file legal claims against the US government. They understand the use of the global trade rules to enforce their claims against the violator of the trade system.
As it did with the International Court of Justice case against Israel, history should remember South Africa as a country that fought for the stability of the multilateral trade system, a fair system of international trade and revitalisation of the WTO dispute settlement system.
Mmiselo Freedom Qumba is a lecturer at the University of Pretoria and an admitted attorney of the High Court of South Africa.