Business Leadership SA CEO Busi Mavuso has expressed concern over US President Donald Trump’s decision to slap 30% tariffs on most exports from SA, describing the move as “deeply concerning”, and has called on the country to prepare for the worst-case scenario.
She said similar interventions employed during the Covid era would be useful in dealing with the tariff fallout and save hundreds of thousands of jobs.
Trump announced in a recent letter addressed to President Cyril Ramaphosa that most goods from SA would be subject to a 30% tariff from August 1.
This effectively nullified the African Growth and Opportunity Act (Agoa), which guarantees duty-free access to the US for most goods and services from Africa, including macadamia nuts from SA. Other hard-hit local exports include vehicles and auto parts, citrus products and wine.
In her weekly newsletter on Monday, Mavuso said: “Although exports to the US make up just 2.2% of GDP, some of that basket will be unaffected because there are specific exemptions, particularly for raw materials such as platinum, gold, chrome and coal that the US deems critical.
“The most critical sectors to be affected are vehicles and parts, agricultural output, steel and aluminium (which faces 50%), and other manufactured goods. That will hit certain companies hard where they are significantly exposed to the US market.”
While some of those businesses will be able to find new markets for their output, in the short term “they will face a shock that will ripple through their supply chains”.
“I worry about how the automotive sector in the Eastern Cape, for example, will withstand it. It is not just vehicle manufacturers, but the many parts manufacturers and other service providers who support them. Under the Trump tariff regime, vehicles and parts will get their own tariff of 25%. The US acquired R35bn in luxury cars and components last year with a third of that consisting of parts, many provided by relatively small businesses,” Mavuso said.
Business Day has reported that SA vehicle exports to the US fell by almost 82% in the first half of the year. Since April, when Trump imposed a 25% tariff on all vehicles imported into the US, SA exports have plunged more than 87%.
Mavuso said the citrus industry was also bracing for a huge impact. “SA has become the world’s second-largest citrus exporter after Spain, but the biggest in the southern hemisphere, positioning it well for northern hemisphere winter demand. The US market has consumed around R1.8bn of citrus exports, supporting about 140,000 jobs across the value chain. Add to that wine, beef and other output and large parts of our agricultural sector will be hit,” she said.
The critical question was whether affected companies can survive long enough to pivot to new markets as shifting production capabilities and securing alternative import agreements took years, not months, Mavuso said, noting: “In the interim, hundreds of thousands of jobs hang in the balance.”
There were urgent policy decisions to be made. “Much like during Covid, when companies were forced to close during lockdowns, the shocks are temporary. But losing companies and the thousands of jobs would be permanent,” the BLSA CEO said.
“Then, government took the decision to support companies with loan schemes and support jobs with the Temporary Employer/Employee Relief Scheme (Ters). Similar interventions should urgently be considered to deal with the tariff fallout.”
Mavuso said the government should also be actively engaged with US counterparts to find ways to avoid the full effect of the tariffs, “but we must prepare for the worst. We cannot be left scrambling for a solution only after all other options have failed”.
She added that “government’s recent R753m emergency funding for HIV programmes, necessitated by the US withdrawal of Pepfar [President’s Emergency Plan for Aids Relief], demonstrates a model for the challenge and response. While this represents only a tenth of Pepfar’s previous spending, it shows government can move quickly when crises demand action.
“We must get ahead of this challenge. Government should immediately establish a tariff impact fund to support viable companies through the transition period while simultaneously working with affected industries to identify and develop alternative markets. Parallel diplomatic efforts with US counterparts remain important, but we cannot wait for their outcome.”
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