The commencement of the 30% tariffs on SA exports to the US market is an opportunity and risk to the SA economy, but has also exposed glaring gaps in the country’s economic policymaking.
On August 7 the 30% tariff regime came into force. The tariffs, which make SA exports expensive for US consumers, had been deferred once, supposedly with US President Donald Trump hoping he would be offered an appeasement trade deal by Pretoria.
The tariffs kicking in last week means the May offer from Pretoria, including buying more US natural gas, was not sweet enough. A revised offer, with more concessions, has since been made to Washington.
On Tuesday, Parks Tau and John Steenhuisen, respectively the trade, industry & competition and agriculture ministers, briefed the media about their four-pronged response strategy to the US onslaught. This entails support for SA’s exporters, defensive measures, support for localisation and appeasement of the US administration (not to be confused with US economic operators).
The briefing came days after a long overdue phone call by President Cyril Ramaphosa to Trump. This was after his visit, at Trump’s invitation, to the Oval Office for a humiliation session, like other hapless presidents before him.
Unlike the first offer, Pretoria’s new offer appears realistic, and stays away from attempting rationality over Trump’s dodgy tariff calculus. Instead of lecturing Trump about what constitutes a trade deficit and unfair trade, the new offer seeks to deal directly with trade issues.
On the upside, the government seems to have finally accepted the things it cannot change: that Trump means business, right or wrong. His mind will — and can — only be changed by his version of reality, not by US allies and trading partners.
For the first time in a long while, Ramaphosa’s ministers in the government of national unity, showed unity. That’s good for SA’s business. Though still at its infancy, the exporter support desk is a welcome move by government. So are the localisation and diversification efforts.
Tau’s predecessor, Ebrahim Patel, received little support from Ramaphosa on his localisation push, which was stymied. Hopefully, under pressure, Tau will be lucky enough to get spirited backing.
Trump’s tariffs have also jolted Pretoria out of the false hope that it can rely on the Africa Growth & Opportunity Act, the unilateral trade law granting thousands of African exports duty and quota-free access to US markets. The law, which expires this year, was only extended to SA because of Bill Clinton’s friendship with Nelson Mandela. Ordinarily SA, with its relatively advanced economy, would not have been eligible.
As with past holders of Tau’s portfolio, he is being asked to focus on the trade component of his job. Patel spent the bulk of his 10 years on competition and industrial policy elements of the job.
As an after-thought, the GNU ministers have disclosed that they haven’t been talking to their counterparts in the Southern African Customs Union (Sacu) about the US challenge and the response. Sacu, one of the oldest customs unions in the world, is crucial to any trade agreements. SA taxpayers pay billions to Botswana, Lesotho, Namibia and Eswatini each year.
This oversight also means Trump has been successful in his divide-and-rule strategy. He has hitherto not treated Sacu as a bloc. For example, Lesotho’s tariffs are different from SA’s.
The defensive measures are easy to abuse to defend indefensible industries. In this respect, SA is lucky to have progressive policymakers and administrators, such as fellow columnist Ayabonga Cawe, head of the International Trade Administration Commission. Throughout his short term in the position so far, he has shown thoughtful understanding and application of the law.
This moment also calls for the government to focus on other issues that matter. Up until now the support measures have focused more on exporters — big business — that interface with US counterparts and less on small businesses that supply to big businesses.
As well as supporting small and big businesses and jobs, the government needs to ensure it doesn’t promote protectionism.
• Dludlu, a former editor of Sowetan, is CEO of the Small Business Institute.
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