GRACELIN BASKARAN: It’s probably not too late to repair US-SA relations

It’s been a fractured week in the world of US-SA relations. President Donald Trump’s executive order announced punitive measures, and in response mineral resources minister Gwede Mantashe called on African nations to withhold minerals from the US.

This political and economic war has no winners. As an American living in Washington DC and working on public policy — but with a deep affinity for SA after nearly seven years living in Johannesburg and Rustenburg — here are a few thoughts: 

First, the trajectory we’re on is a dangerous one. I’ve been in SA for the past two weeks for the Mining Indaba, and then meetings in Johannesburg. I continue to hear rhetoric that this is as bad as it could get. That’s simply not true.

Losing African Growth & Opportunity Act (Agoa) benefits would also not be the worst that could happen. Import tariffs could decimate SA exports to the US, and Trump has already begun using those. He’s openly discussed and implemented swingeing tariffs on countries such as China, Canada, Mexico and Japan. 

Tariffs would drastically undermine the competitiveness of SA goods and the limited economic growth the country has. The US is the second-biggest buyer of SA goods. In 2022, SA exported $10.9bn worth of goods to the US, including $4bn of platinum and $1bn of automotives.

Importantly, the US has also become a bigger part of the SA economic story in recent years. Exports to the US increased at an annualised rate of 9.3% between 2017 and 2022, from $7bn to $10.9bn.

If SA doesn’t strengthen its diplomatic presence ambassador Musk will be SA’s representative. 

But SA is also vital to US interests as it works to rapidly create a secure mineral supply chain independent from China. The US gets about 97% of its chrome and 25%-40% of its platinum, manganese, arsenic and titanium from SA. These metals are critical to making catalytic converters for cars (platinum), producing steel (manganese) and manufacturing defence technologies such as missiles and fighter jets (titanium). For most of these commodities Russia or China would be key alternative suppliers. It doesn’t want that. 

Allowing the US-SA relationship to continue on the current trajectory could be costly to both sides. In a research paper published by the Brookings Institution, Yash Ramkolowan and I used a computable generable equilibrium to forecast the cost of losing Agoa. It was negligible — less than 0.06% of GDP — since tariffs are nominal. But future scenarios could be quite different. A 20% tariff (rather than the 2% that applies to some goods) would drastically undermine the competitiveness of SA goods and inevitably lead to a loss of investment and jobs in SA. 

I’m less worried about the substance of the recent executive order. It’s not that fun to be a refugee in America — take it from me. I am more worried about the trajectory. So how do we change course? 

• Strengthen SA’s diplomatic presence in the US. This doesn’t mean SA needs to expand its presence — rather, the embassy needs to step up to play a mediating role. The job of diplomats is to build understanding and awareness (particularly important now given the miscommunication on what the Expropriations Act actually says), negotiate through difficulties, and work to find a compromise. If SA doesn’t strengthen its diplomatic presence ambassador Musk will be SA’s representative. 
• SA needs to operate its best self-interest. When Trump announced punitive measures against SA other Brics countries were silent. No-one had SA’s back. No-one offered to replace Trump’s funding. No-one offered to provide refugee status. Everyone stayed quiet in fear of US retaliation. As SA moves forward it needs to base its foreign policy on its own economic self-interest rather than historical allegiances. 
• Keep the relationship focused on the transactional potential. That’s the approach of the new US administration. Both the US and SA stand to gain from the trade, investment and jobs generated by amending the relationship. 

• Dr Baskaran, a development economist, is founding director of the Project on Critical Minerals Security at the Centre for Strategic & International Studies in Washington, DC.