D-day for South Africa this week

US tariffs of 30% on South African goods are set to hit later this week, with the government and businesses hoping for an extension.

In April, US President Donald Trump announced that his administration would impose so-called “reciprocal tariffs” on nations worldwide.

With a global 10% tariff on all imports to the US in effect, the reciprocal tariffs would have seen a higher rate applied to countries that carried negative trade balances with the world’s biggest economy.

For South Africa, Trump claimed the deficit with the United States warranted a tariff of over 60%. However, a “discounted” rate of 30% would be applied.

Many were quick to criticise the tariffs. They had little to do with trade policies and tariffs charged by countries and were rather based on a rudimentary calculation of trade balances.

According to the Trump administration, the US imported $14.8 billion in goods from South Africa, while only exporting $5.8 billion to the country. This gave it an ‘imbalance’ of -60.6%, hence the tariff.

Despite the US government’s approach making very little sense, the Trump administration has used the tariffs as a negotiation tool to push its “America First” ideology.

Reinforcing this tactic, soon after the tariffs were announced—resulting in market chaos—the president announced a 90-day “pause”, giving countries time to negotiate.

In the interim, the universal 10% tariff and 25% tariff on the auto sector remained in effect.

Unfortunately, the “pause” is widely expected end this week for the countries—including South Africa—that have not yet negotiated and secured a trade deal with the United States.

Trump warned on the 4th of July that the White House had begun notifying countries about new tariffs being imposed on them, adding that some tariffs may even be higher than initially announced.

South Africa wants to make a deal

The Department of Trade, Industry and Competition (DTIC) asked for an extension on the pause, allowing it to revise its proposed deal with the world’s largest economy.

South Africa’s original trade framework, presented to the US in May following a high-profile visit to the White House, involved deals focused on agriculture, critical minerals and automotives.

Deputy Minister of Trade and Industry, Zuko Godlimpi, met with the US Assistant US Trade Representative for Africa, Connie Hamilton, in June, saying that engagements were positive.

However, no deal has been signed as yet, with the deadline looming.

Speaking to the Daily Maverick, DTIC Minister Parks Tau said he believed discussions with the US would continue after 9 July.

Trump has only amplified economic uncertainty around his tariffs since then, announcing on Monday (7 July) that any country that aligns itself with the anti-American policies of BRICS would receive an additional 10% tariff.

This follows several BRICS nations criticising Israel and America’s recent bombing of Iran, which became a member of BRICS in 2024.

A lack of a deal could be disastrous for South Africa

Business Leadership South Africa CEO Busi Mavuso said the lack of a trade deal could be a disaster for South Africa.

“The looming expiration of the current 10% tariff arrangement on 9 July could fundamentally alter trade flows and force rapid strategic adjustments,” said Mavuso.

Although she credited the government for working hard to deal with Washington, finding a solution with the US government remains elusive.

She said that failure to get an extension on the tariff freeze or solidify a trade deal with the US would put severe pressure on South Africa’s key industries.

This will be mostly felt in manufacturing and agriculture, sectors that drive employment.

The disruptions will only be worsened by South Africa’s probable loss of access to the African Growth and Opportunity Act (AGOA).

AGOA allows South Africa and several other African countries duty-free access to the American market and is crucial for South African vehicle manufacturers and other businesses.

BMW CEO Peter van Binsbergen said the company will not export vehicles to the US over the next two years, arguing that an extension to AGOA is crucial.

South Africa is likely to exit AGOA in September, if not sooner, which, together with the tariffs, could severely hit the country’s exports.

With reporting from Bloomberg