Ahead of a planned announcement of reciprocal tariffs that will affect all major US trading partners, Washington has flagged SA legislation and policies, including the Expropriation Act and the Public Procurement Act, as barriers to US investment and trade in the country.
The US trade representative office’s national trade estimate report, released two days ahead of US President Donald Trump’s plan to impose reciprocal tariffs on the country’s major trading partners, outlines trade barriers in more than a dozen foreign countries, including SA.
The Expropriation Act and broad-based BEE legislation have been cited by Trump, his adviser Elon Musk and Republican legislators as reasons behind halting funding to SA.
The trade barriers identified include tariffs, laws, regulations and policies that the US says undermine competition for US companies. The Trump administration claims that US producers face unfair trade barriers when exporting abroad. Its trade moves reflect a protectionist strategy aimed at reshaping the US and global economies.
For SA — which has already faced many adverse actions from the Trump administration, including halting health, climate and military aid — the trade moves come while the country seeks to reset its relations with the US.
Though SA aims to accommodate Trump’s transactional approach to global trade, the country’s political leaders are unlikely to change SA’s foreign or domestic policies in the process.
“No American president in modern history has recognised the wide-ranging and harmful foreign trade barriers American exporters face more than President Trump,” US trade representative Jamieson Greer said.
The report notes the US and SA have a trade and investment framework agreement, which was amended in 2012. The report, however, also notes that the US has expressed concerns to SA about unequal tariffs, highlighting the one-sided benefits offered to SA imports under programmes such as the African Growth & Opportunity Act (Agoa).
Agoa provides preferential access for 20% of the country’s exports to the US or 2% of its shipments globally. Since Agoa’s introduction, the value of SA’s automotive exports to the US surged to R27.9bn in 2023.
Some US companies have reported challenges in competing for SA government tenders due to the Public Procurement Act, which aims to address weaknesses in the procurement process and enhance transparency.
The legislation, signed into law by President Cyril Ramaphosa in 2024, prioritises contracts for domestic small, medium and micro enterprises (SMMEs) and historically disadvantaged individuals.
“The act’s focus on local content and preferential treatment for domestic SMMEs may make it more difficult for US and other foreign companies to compete in the SA market unless they form partnerships with local firms,” the report states.
“Some companies have expressed concern that the preferential procurement provision lacks sufficient detail on their implementation and measures to monitor preferential procurement compliance.”
Data from the US trade representative shows that total goods trade with SA was $20.5bn in 2024. US goods exported to SA in 2024 were $5.8bn, down 18.3% ($1.3bn) from 2023. Goods imported from SA in 2024 were $14.7bn, up 4.9% ($679.4m) from 2023. The US goods trade deficit with SA was $8.8bn in 2024, a 29% increase ($2bn) over 2023.
The US trade representative trade barriers report also flags the Expropriation Act as a barrier to US investment in SA because it “explicitly allows expropriation of property, including land, without compensation in some circumstances”.
Ramaphosa signed the bill into law in January, repealing an apartheid-era law of 1975 allowing the state to seize land in the public interest.
A recent analysis of the Expropriation Act by Standard Bank concluded that the legislation does not infringe on private property rights and does not provide for the state to conduct wide-scale land grabs.
The promulgation of the Expropriation Act has also divided the government of national unity, with the DA challenging aspects of it in court.
On state-owned entities, the US trade representative flagged limited competition in sectors such as energy, freight rail and telecommunications as barriers for US investment.
“Limited competition is allowed in some sectors (for example, telecommunications and air). The limited nature of the competition in these sectors has often discouraged foreign investment,” the report reads.
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