Trade between the US and China — SA’s two biggest partners — could plunge by as much as 80% this year, the World Trade Organisation has warned, highlighting growing fragmentation that could push countries to align with one of two increasingly isolated economic blocs.
In its latest “Global Trade Outlook and Statistics” report released on Wednesday, the WTO said the drop in US-China trade coverage could compel many countries to rethink their trade strategies and market dependencies, leading to longer-term adjustments in global supply chains.
“A drop in US-China trade of these magnitudes is tantamount to a decoupling of the two economies,” the WTO director-general Ngozi Okonjo-Iweala said.
“Whilst US-China trade accounts for only around 3% of world merchandise trade, a decoupling between the two major economies could have far-reaching consequences. If it were to contribute to a broader fragmentation of the global economy along geopolitical lines into two isolated blocs, our estimates suggest that global real GDP would be lowered by nearly 7% in the long term.”
Despite pausing most reciprocal tariffs announced on April 2 for most of the US’s trading partners, President Donald Trump increased levies on most Chinese goods to 145%. China quickly responded, imposing a 125% tariff on US goods.
Trump’s 90-day pause allows countries — including SA, which was hit with 31% import duties on its exports to the US — to present bilateral trade deals to the US that could reset global relationships. SA currently runs a $8.8bn trade surplus with the US.
The US accounts for 8% to 9% of SA exports, based on 2023-24 averages. Reciprocal tariffs now in play are expected to weigh heavily on outbound trade, dealing a potential blow to one of SA’s key export markets.
Still, the policy uncertainty could see SA increase exports to its other trading partners while finding new markets for its goods. China is SA’s largest trading partner, having overtaken the EU in 2023. SA has a $11bn trade deficit with China.
The Geneva-based WTO has projected a three percentage point decrease in world merchandise trade for 2025, an about turn from earlier in the year when WTO economists expected trade would continue to grow due to better economic conditions.
Global goods trade is now expected to drop by 0.2% in 2025, followed by a 2.5% recovery in 2026.
Since coming to power, Trump has imposed sweeping tariffs on his country’s main trading partners — China, Canada and Mexico. He has also targeted tariffs on steel and aluminium imports all trading partners
“If enacted, reciprocal tariffs would reduce global merchandise trade volume growth by 0.6 percentage points in 2025 while spreading trade policy uncertainty could shave off another 0.8 percentage points, posing particular risks for least developed countries,” the WTO said in the report.
The US tariffs have also effectively rendered the African Growth and Opportunity Act (Agoa) obsolete. The two-decades old legislation gave beneficiaries, including SA, non-reciprocal and preferential access to US markets.
“At the aggregate level, Africa’s economic outlook remains broadly stable under current trade policies, with real GDP growth for the continent largely unchanged even if reciprocal tariffs are reinstated,” Okonjo-Iweala said.
“This is because Africa’s trade with the US is relatively small. The share of Africa’s exports to the US as a percentage of its total exports to the world is about 6.5% and the share of Africa’s imports from the US as a share of its total imports is 4.4%.”
“Aid is drying up and trade is becoming more politicised. So there needs to be a focus on raising domestic resources, attracting domestic, regional and foreign investments on faster and greater trade integration within the continent such that intra-Africa trade is lifted well beyond the current 16%,” she added.
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