“It does feel an awful lot like the sky is falling,” says Donald MacKay, founder of XA Global Trade Advisors, hours after Donald Trump imposed a 31% tariff on South African imports to the US. “For some industries, like South Africa’s carmakers and farmers, this is a proper crisis.”
MacKay, who has 28 years of experience in global trade stemming back to his days at Deloitte, says the tariffs represent a watershed, peeling back decades of globalisation.
For South Africa, a country that arrived late to the globalisation party as a result of being persona non grata until democracy in 1994, this is a bitter blow. The hit to South Africa’s GDP could amount to as much as $3bn – nearly 1% of the country’s total GDP – experts believe.
“Any policy that reduces even 1% of that GDP is an enormous pounding for any country,” says MacKay. “In all, South Africa’s exports make up about 30% of the country’s GDP, so it is not existential, but it’s a heavy hit.”
The scale of the tariffs was “a lot worse than anyone expected”, says Nicky Weimar, chief economist at Nedbank. “It certainly isn’t what the Americans expected and not what the markets in America or investors expected.”
Still, people knew something nasty was brewing. For weeks, the globe has been bracing for what Trump termed “Liberation Day”, in which he would unveil a range of tariffs on countries.
“This is one of the most important days, in my opinion, in American history,” the US president said in an hour-long speech in the White House’s Rose Garden. April 2, he said with characteristic self-reverence, will “be remembered as the day American industry was reborn” and “the day we began to make America wealthy again”.
Using a cardboard chart illustrating his new tariffs, Trump argued the US would only impose tariffs equal to half of what other countries impose on it. This decision, he said, is because “we are being very kind”.
In South Africa’s case, this “kindness” means Trump will “only” impose a 31% tariff on imports into his country, based on his calculation that the country imposes a 60% tariff on US products it imports.
If Trump were right, that would indeed be alarmingly high – but that number bears no resemblance to South Africa’s real import duty. Instead, the real number is 7.4%, say MacKay and Agricultural Business Chamber chief economist Wandile Sihlobo.
That 60% calculation is “not based on sound calculations”, says Sihlobo.
Trump got to his Frankencalculation by taking a country’s trade surplus (how much more it exports to the US than it imports), dividing that by total exports to the US, and halving it.
“Some bad things are going on in South Africa,” Trump said, referencing the Expropriation Act, which has partly led to $407m in aid to South Africa’s HIV/Aids programme being cancelled.
He railed too against South African restrictions on US pork, saying its “animal health restrictions … are not scientifically justified”. Equally, restrictions on chicken imports have led to a 78% decline in US poultry exports to South Africa, from $89m in 2019 to $19m in 2024.
Scarcely conceivably, it could have been much worse for South Africa.
That is because South Africa’s largest exports to the US, amounting to about $4bn last year, were minerals and metals – including gold, platinum, chrome and copper.
And while there are very few “exemptions” to the tariffs, copper, semiconductors, gold, and “other certain minerals that are not available in the US” will not be included. This is good news for a country that remains the largest producer of platinum, which is used extensively in car engines.
There is less good news for agriculture, where Trump’s tariffs are a disaster – but not existential. “The US accounts for 4% of South Africa’s agricultural exports, totalling $13.7bn last year,” says Sihlobo.
He points out that a large portion of this $13.7bn has come through duty-free access to the US market under the African Growth and Opportunity Act (Agoa). But Agoa is now “probably over or, at best, limited”, he says.
In practice, this means that South Africa’s biggest agricultural exports will now be subject to a 31% tariff in the US, where it will have to compete with Chile, Australia and Brazil, which will only have a 10% import tariff imposed on them.
Says Sihlobo: “This will weigh on South African citrus, wine, grapes, fruit juices and nuts, among others.”
Curbing growth to 1%
The question is, what should South Africa do? Not much, says MacKay. He reckons it would be foolish of South Africa to impose “reciprocal tariffs” in critical minerals, as some, including mines minister Gwede Mantashe, have urged.
“Small economies need to find ways to avoid, rather than confront, Trump,” MacKay says. Hiking export tariffs on metals, for example, would only make it harder for countries to sell those commodities globally – and if anyone loses, it’ll be the workers in those mines who lose their jobs.
President Cyril Ramaphosa responded phlegmatically to Trump, saying the tariffs “affirm the urgency to negotiate a new bilateral and mutually beneficial trade agreement”.
For Sihlobo, the urgency would be to negotiate a free-trade agreement between South Africa and the US. “The best approach would still be to seek better relations with the US and attempt to understand their misgivings about South Africa’s trade matters,” he says.
For a country in Trump’s crosshairs for the Expropriation Act, for its actions against Israel and for BEE, that is probably easier said than done.
Especially as Ramaphosa has other more pressing matters to worry about at home – like keeping his disintegrating grand coalition government together after it couldn’t agree on a budget.
Azar Jammine, director and chief economist of Econometrix, says Trump’s intervention and uncertainty over South Africa’s teetering coalition are likely to put a ceiling on the country’s GDP growth of 1% this year – far below the 3% Ramaphosa is targeting.
“The far more dangerous thing is not the direct impact of the 30% tariff on South African exports, but the indirect effect of these tariffs globally in depressing worldwide economic growth,” he says. “My biggest concern is the economic effect on our exports, if the world economy goes into a big recession.”
Jammine points to the silver lining here, which is that South Africa isn’t alone.
Some countries had it worse – Lesotho was hit with a 50% import tariff, Cambodia 49%, Vietnam 46%, India 26% and South Korea 25% – though all of the countries he cited, from Brazil to the UK, were hit with a minimum 10% tariff.
But the real losers from this tariff war extend far further, including the very investors on Wall Street who supported the Republican’s election in December, expecting pro-market policies, tax cuts, deregulation and a continuation of the stock market rally.
“What they got instead is a huge amount of uncertainty and a dramatic geopolitical alignment which no-one saw coming,” says Weimar. “The scale of the tariffs are enormous. So, the outcome of all of this is obviously going to be inflationary. It will have implications for monetary policy.”
The upshot is that the US Fed will, in all likelihood, stop cutting interest rates as inflation rises – and countries like South Africa, hostage to the global tide, will be forced to follow suit.
“Investors are starting to question the credibility of the US political leadership and US economic policy,” she says, adding that all of this is “undermining trust in the dollar”.
The final irony would be if the rest of the world recalibrates to the new era of US isolationism, “liberating” themselves from a reliance on the US by finding new trading partners.
Top image: Donald Trump holds up a chart while speaking during a “Make America Wealthy Again” event at the White House on “Liberation Day”. Picture: Chip Somodevilla/Getty Images.
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