US President Trump’s trade policy has once again delivered a whiplash to South Africa and the world. The punitive 31% “reciprocal” tariff, imposed on April 2nd, 2025, coupled with a 25% levy on automotive imports, threatened to eviscerate the preferential access granted under the African Growth and Opportunity Act (AGOA). However, a dramatic turnabout has granted South Africa a 90-day reprieve, as Trade, Industry and Competition Minister Parks Tau confirmed.
The initial tariffs, justified by Trump’s assertions of South Africa’s allegedly skewed trade practices, were met with consternation. While exemptions on key mining commodities offered some relief, the automotive sector, agriculture, and wine industries faced crippling duties. The reversal, seemingly on the basis of the response of the bond market, offers a temporary respite. Yet, the broader picture remains clouded. Trump’s 10% across-the-board import tariff persists, elevating duties on AGOA-benefiting exports from zero to 10%. This, while less severe, still erodes South Africa’s competitive edge.
The rationale behind the reprieve, according to Minister Tau, lies in the US’s desire for a “mutually beneficial” trade arrangement. Washington perceives existing trade structures as disproportionately favouring South Africa. Negotiations for a revived trade and investment facilitation agreement are now on the table, encompassing agriculture and direct investment. However, this endeavour faces considerable domestic and international headwinds. Deep policy divisions within South Africa’s political landscape, exemplified by the ANC and DA’s impasse on key reforms, suggest a potential reluctance from the ANC to concede on issues like the Expropriation Act, likely to be on the US negotiating agenda. President Trump’s past criticisms of South Africa on these very matters underscore the broader scope of potential US demands, extending beyond mere trade imbalances. Furthermore, the fragility of the Government of National Unity could undermine South Africa’s negotiating leverage, with the US potentially viewing a less stable government as an unreliable long-term partner.
The volatility of Trump’s trade pronouncements has sent markets into a frenzy. The 90-day pause, while welcome, offers no long-term certainty. Moreover, the escalating trade war between the US and China, with tariffs on Chinese imports soaring to 125%, casts a long shadow. This geopolitical tussle could have cascading effects on global trade flows, including those involving South Africa.
In this turbulent environment, South Africa must tread carefully. Carefully considered diplomatic engagement with the US remains crucial. However, the imperative to diversify export markets is more pressing than ever. Strengthening ties and pursuing bilateral agreements with the EU, Asia, and BRICS+ nations, are essential. Critically, domestic reforms to enhance export competitiveness are non-negotiable. Investing in port and rail infrastructure, streamlining customs procedures, and fostering a more business-friendly environment will bolster South Africa’s ability to compete globally, irrespective of US trade policy. The South African government, and its businesses, must seize this fleeting window of opportunity. The reprieve offers a chance to recalibrate, to fortify trade relationships, and to prepare for a future where the whims of global trade are as unpredictable as ever. The tango with President Trump, it seems, is far from over.
