In an otherwise quiet week for economic data, markets are monitoring any announcement leading up to Wednesday, when US President Donald Trump’s 90-day pause on reciprocal tariffs is set to lapse.
“The focus will be on where the new unilateral import tariffs will be relative to the original rates,” Nedbank economists said.
So far, only the UK and Vietnam have finalised agreements with the US. Meanwhile, Trump said he would send letters to a few countries, hoping to conclude more trade deals before Wednesday.
“It is difficult to try to predict what Trump will do next week, or going forward. Some speculate that he might extend the current 10% universal tariff on all countries with which the US does not have a trade agreement by the deadline,” said Lisette IJssel de Schepper of the Bureau for Economic Research.
Other analysts believe he could impose anything from 10% to 50%.
The US is a key market for SA exports, accounting for 8.5% of the total. In 2024, about a third of the exports enjoyed preferential access through the African Growth and Opportunity Act (Agoa).
In April, the Trump administration imposed 31% reciprocal tariffs on SA, after which Trump granted the 90-day pause to allow time for negotiations. SA has since requested an extension of the deadline.
SA may also be required to submit a revised trade agreement to the US to align with the Trump administration’s new trade framework, which is set to guide future American engagements with Sub-Saharan African nations.
Through the framework deal, SA is seeking to have some of the key export products exempted from the section 232 duties, including cars and car parts, as well as steel and aluminium through tariff rate quotas.
“SA is also seeking the maximum tariff application of 10%, as a worst-case situation,” the department of trade, industry & competition has said.
SA is also seeking the maximum tariff application of 10%, as a worst-case situation.
— department of trade, industry & competition.
The dollar has weakened as the end of the global pause approaches. On Friday, the rand was trading at R17.59 to the dollar.
President Cyril Ramaphosa arrived in Rio de Janeiro on Sunday for the 17th Brics Summit, running until Monday.
Brics, originally made up of Brazil, Russia, India, China and SA, expanded last year to include Egypt, Ethiopia, Indonesia, Iran, Saudi Arabia and the United Arab Emirates.
According to Reuters, this broader membership has strengthened the summit’s influence as a voice for the Global South, though it has also made it harder to agree on sensitive international issues.
Also on Monday, advisory network Apolitical will publish a report highlighting the first stage of the AI Campus platform’s work to train a million public servants in creating AI-ready governments.
The report reviews AI Campus’s progress over its first two years, including its influence in SA. It covers efforts to change perceptions of AI, develop new skills and capabilities, and improve services for citizens.
Manufacturing production data for May is due on Thursday.
“While production declined sharply on an annual basis, output perked up on a month-on-month comparison in April. Should we see another improvement, this bodes well for the factory sector’s contribution to GDP in the second quarter. However, the decline in the Absa PMI in May suggests this is unlikely,” IJssel de Schepper said.
Nedbank economists forecast a contraction of 0.5% year on year, a moderation from the sharp 6.3% decline in April.
“While the monthly data may show some improvement, underlying conditions remain weak,” they said.
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