The rand is trading weaker on Friday after President Donald Trump imposed new tariff rates on dozens of the US’s trade partners.
In terms of the new tariff regime, a 30% US tariff will be imposed on SA exports. Trump’s new tariffs will come into effect in seven days from yesterday’s order.
After breaching the R18/$ level earlier on Thursday, the rand weakened almost 3% in late trade ahead of the August 1 deadline for countries to negotiate tariffs with the US. At 7.20am on Friday the rand was trading at R18.2249/$, according to Sharenet data, little changed from levels late on Thursday.
Reuters reported that the dollar was heading for its best week in almost three years against its major peers, maintaining momentum on Friday as Trump imposed new tariff rates on dozens of countries.
The rand was not the only casualty, with the Canadian dollar falling to its lowest level since May 22 after Trump imposed a 35% levy on that country’s exports to the US instead of an earlier threatened 25%. The Swiss franc eased as much as 0.26% after Trump set a 39% duty on Swiss imports, up from the 31% he previously mooted, according to Reuters. The euro remained near an almost two-month low.
Business Day reported that Pretoria was treating a 30% US tariff on SA exports as a fait accompli, triggering a contingency plan to keep SA’s production lines moving in key sectors.
The punishing tariff wall ushers in new trade relations. Pretoria is also concerned that the new levies could deter investment and accelerate capital flight, particularly at a time when SA is seeking to boost industrial output, lift the economy and put millions of rand into jobs.
These emergency measures, led by the launch of an export support desk, come amid mounting pressure on strategic industries such as automotive manufacturing, steel, agro-processing and chemicals.
These sectors risk losing competitiveness in the US market, SA’s second-largest trading partner, once the export duties come into effect.
The support desk will serve as a one-stop contact point for exporters, providing real-time updates, guidance on compliance and support in pivoting to alternative markets across Africa, Asia, the EU and Latin America.
“The desk will provide updates on developments and tailored advisory services to exporters on alternative destinations, guidance on market entry processes, insights into compliance requirements and linkages to SA embassies and high commissions abroad,” the trade, industry & competition department said.
“This tariff hike poses a direct threat to our export capacity, particularly in strategic sectors such as automotive, agro-processing, steel and chemicals, among others.”
Business Day previously reported that the government was also considering offering the motor vehicle and agricultural sectors alternative markets and possible Treasury-backed tax incentives.
With Reuters and Thando Maeko
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