South Africa Opposes Trump’s 30% Tariffs
Bottom Line: After a 90-day reprieve, U.S. president Trump announced on July 7 that the U.S. would implement 30% additional tariffs against South Africa-origin products from August 1. Despite President Ramaphosa opposed what he calls the unilateral trade tariffs by the U.S., and emphasized that South Africa would continue with its diplomatic efforts to ensure a more balanced and mutually beneficial trade relationship with the U.S., we think South Africa’s ability to negotiate a favourable trade deal with the U.S. is currently constrained by the hightened political tensions between the U.S. and South Africa. We foresee South Africa’s automotive and agricultural sectors will likely get the hardest hit, should the tariffs proceed.
After a 90-day reprieve, U.S. president Trump announced on July 7 that the U.S. would implement 30% additional tariffs against South Africa-origin products as of August 1. According to sources, Trump sent a letter to South African president Cyril Ramaphosa, along with 13 other countries, informing them of his latest tariff plans. In his letter, Trump mentioned that South Africa's trade relationship with the U.S. has been, unfortunately, far from reciprocal.
Replying to Trump’s letter, Ramaphosa said on X that the 30% tariff is not an accurate representation of available trade data, and opposed what he calls the unilateral higher trade tariffs imposed by the US. He stated that South Africa would continue with its diplomatic efforts to ensure a more balanced and mutually beneficial trade relationship with the U.S., leaving the door open to strike a trade deal. Ramaphosa added the issue is still under consideration by negotiating teams from South Africa and the U.S. Speaking about tariffs, Democratic Alliance’s (DA) leader and agriculture minister Steenhuisen also indicated during a press conference that "We need to try and find out exactly where the mark is with the U.S. What is it that they actually want? And whether that's in the realm of the possible for us."
Despite remarks by Ramaphosa and Steenhuisen, it appears signing a favourable trade deal will likely be hard for South Africa, particularly considering U.S.-South Africa relations are not at its best during Trump’s second era as U.S. determined to stop all aid to South Africa, accusing it of discriminating against the white minority. Despite Ramaphosa visited the White House in May to mend relations and discuss a possible deal, the tension between Trump and Ramaphosa caused parties not to come to terms since Trump confronted him with a series of contested claims about the killing of white farmers.
Taking into account that South Africa is the only country from sub-Saharan Africa and the U.S. is its second-biggest trading partner, 30% additional tariffs will trim South Africa’s exports. We foresee South Africa’s automotive and agricultural sectors will likely get the hardest hit, should the tariffs proceed. Minerals, which constitutes almost half of what South Africa exports to the U.S., will get 0% tariffs since U.S. regards minerals critical is a relief for South African mineral producers. There is still a risk of currency volatility as export revenues will likely decline.
As mentioned, we think South Africa’s ability to negotiate favourable deals with the U.S. is currently constrained by the recent political tension considering that some of African National Congress (ANC) policies are perceived contrary to the U.S interests. One solution to the tariff challenges could be stepping up collaborative efforts to enable South African exporters to diversify their trade relationships and enhance ties particularly with traders from the EU and China, but seems not very likely in the short term.