US President Donald Trump’s sweeping 30% tariffs on most SA exports, coupled with the looming expiry of the African Growth & Opportunity Act (Agoa), have introduced a new and uneven set of pressures on local economies, pressures that will not be felt equally across the country.
While much of the commentary so far has focused on national trade balances, the municipal implications are immediate and profound. Industrial metros, port cities, agricultural towns and mining hubs will experience markedly different outcomes, depending on their sectoral mix, poverty levels and fiscal resilience.
The tariffs remain broad, but exemptions and quotas have provided some relief. Platinum group metals (PGM), manganese, small allocations for certain agricultural products and specialised manufacturing components have been spared the full tariff impact. This has created a patchwork of winners and losers at local level: some municipalities will see industrial bases contract sharply, while others could even benefit from trade diversion and rerouted exports to other markets.
Early signs of these shifts are already visible. Automotive production in Nelson Mandela Bay and Tshwane has been scaled back, signalling the fragility of export-driven manufacturing. US citrus orders are being deferred or cancelled in Sundays River Valley and Citrusdal, putting seasonal jobs at risk. Meanwhile, for the moment, Saldanha Bay and Richards Bay have reported stable or increased bulk mineral throughput, reflecting exemptions for certain minerals and the possible rerouting of exports.
Trade diversion is now a defining feature of this new phase in SA’s export economy, with exporters seeking markets in China, the EU and across Africa. The department of trade, industry & competition has launched a national export support desk to help exporters with compliance, market identification and redirection. Targeted measures, including possible Treasury-backed tax incentives for industries, have been announced, but implementation remains uneven.
The scale of the challenge is immense for a government not known for its business sensitivity or agility in responding to rapidly changing global trade conditions. These measures also come just as SA has begun tackling long-standing transport bottlenecks and chronic mismanagement at its ports — issues that have crippled export efficiency.
Severe backlogs at the Port of Durban in 2023 left thousands of containers stranded for weeks, while equipment failures and capacity constraints at Ngqura and Cape Town ports delayed agricultural shipments, costing producers valuable access to seasonal markets. Addressing these inefficiencies is critical if any benefits from trade diversion are to be realised.
The Agoa outlook has darkened further. Political and diplomatic tensions — including US concerns about SA’s foreign policy stance — have hardened expectations that the agreement will lapse in September. Trade, industry & competition minister Parks Tau has warned that the new tariffs have already “nullified Agoa benefits”, underscoring the urgency of diversifying trade relationships.
On the monetary side, the SA Reserve Bank’s repo rate cut and new 3% inflation anchor offer modest relief to credit-reliant households and municipalities by lowering debt servicing costs. Yet in hard-hit export-linked municipalities, falling household incomes and rising arrears are likely to outweigh these gains.
When tariff exposure is viewed alongside poverty levels using Municipal IQ’s municipal poverty index (PI), the risks are stark. The index measures poverty by combining household income, unemployment and access to basic services, with higher scores indicating deeper poverty. Among the most vulnerable are automotive and agro-export hubs: Buffalo City (high PI), Nelson Mandela Bay (medium PI), eThekwini (medium PI) and Tshwane (low PI).
In these municipalities, job losses from reduced US market access will quickly translate into higher municipal arrears, indigent register growth and increased protest risk, particularly in high-poverty wards. Agricultural municipalities such as Citrusdal, Sundays River Valley and the Cape winelands (low PI) face similar risks, especially given the seasonal nature of employment.
Medium-risk municipalities such as Newcastle (high PI) and Emfuleni (medium PI), though not heavily reliant on US exports, have fragile local economies and high poverty levels. Even indirect effects from slower domestic manufacturing could push them into deeper fiscal distress.
Potential “beneficiaries” are not immune to social pressures. Rustenburg (medium PI) and Moses Kotane (high PI) may gain from strong demand for tariff-exempt PGMs, but unless export windfalls are more broadly shared by mining houses — something that is not happening — poverty will continue to limit the positive local impact. Similarly, Saldanha Bay and Richards Bay could see increased port activity, but infrastructure strain and uneven distribution of benefits remain concerns.
For high-poverty municipalities tariff effects will likely be felt sooner and more severely. Falling household incomes will drive arrears higher, indigent support demand will increase, and the likelihood of service delivery protests will grow. Municipalities with lower poverty scores but high tariff exposure may be more fiscally resilient, but pockets of deprivation still require close monitoring.
Revenue pressures will be most acute where industrial load factors (such as demand for electricity from large users) and payment rates are already under strain. Even municipalities positioned to benefit from trade diversion must anticipate infrastructure challenges if throughput volumes surge. While national support measures may cushion immediate revenue shocks, they risk entrenching dependence on the fiscus unless combined with initiatives to strengthen local economic resilience.
Local government decisionmakers and stakeholders at all levels — local, provincial, and national — must track early warning signs of stress: industrial production schedules, arrears data, port commodity flows and protest trends.
The durability of any municipal “winners” will hinge on how quickly exporters can embed themselves in new markets, the resilience of global demand and the extent to which policy interventions address both economic and social vulnerabilities. Relief measures should explicitly prioritise poverty-weighted vulnerability criteria to prevent tariff shocks from disproportionately damaging already fragile communities.
The combined weight of the tariff shock, Agoa uncertainty and uneven gains from trade diversion present a fragile outlook for SA’s municipal economies. Export-linked metros face immediate risks of revenue loss and social instability; secondary industrial towns risk contraction and outmigration; and rural or border municipalities may see only limited benefits from diversification.
Unless targeted, poverty-sensitive support is implemented, the next year could bring widening fiscal stress, social unrest and a further weakening of local government capacity and delivery.
• Allan, a former special adviser to a previous local government minister, is MD of data and intelligence organisation Municipal IQ.
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