SA’s response to the US’s sweeping tariffs is a study in calculated calm.
President Donald Trump’s tariff blitz, with levies reaching 31% for SA and nullifying benefits under the African Growth & Opportunity Act (Agoa), has rattled investors, sending the stock market plunging to levels not seen since the early days of the Covid-19 pandemic.
These tariffs, the highest since the Great Depression, are part of a broader campaign to raise US revenues and force manufacturing onshore. Starting at 10% for all nations but climbing higher for number of trade partners — reaching 34% for China, 20% for the EU and 50% for Lesotho — the damage will be significant.
However, unlike these major economies, which have responded with tit-for-tat measures, SA has eschewed the temptation to engage in protectionist theatrics. Instead, it has opted for restraint, reform and a touch of strategic audacity — a choice that deserves applause, even as it invites scrutiny.
At first glance, SA’s refusal to retaliate might seem overly cautious. After all, the EU is targeting $28bn worth of US exports with its countermeasures, while China has imposed reciprocal tariffs of 34% on US imports, counteracting economic nationalism from Washington.
These strategies, while aggressive, aim to preserve their positions in global trade by matching the US’s hardline approach.
But let’s not mistake caution for weakness. SA has chosen not to be dragged into the mud and to participate in the blowing up of the international economic order. For one thing, there are no winners in a trade war. For instance, the US unemployment rate could top 7.3% by early 2027, as per ratings agency Moody’s, and the burden to households is equally severe, with their costs climbing by at least $3,400 annually, according to the Yale University Budget Lab.
For another, retaliatory tariffs show utter disregard for the World Trade Organisation (WTO), whose principles SA has painstakingly upheld. The WTO foundations rely on multilateralism, a foreign policy agenda of dozens of the countries in the Brics+ bloc, which has a collective vision for a more inclusive and co-operative global order.
Critics may question whether SA’s measured approach is sufficient. Trump’s protectionist policies will wreak havoc on key sectors such as vehicle manufacturing, agriculture and others — industries that are critical for job creation and economic growth.
SA trade, industry & competition minister Parks Tau, alongside his counterpart in international relations & co-operation, Ronald Lamola, outlined diversification and regional integration to counteract these challenges. Even so, these strategies require time to yield results.
The answer lies in SA’s often underestimated leverage. The US relies on SA for critical minerals that are indispensable to its industries — 97% of chrome ore, for example. That’s not reliance — it’s dependence with capital “D”, and Pretoria knows where the mineral gold mine lies.
Other minerals that are indispensable to US industries include manganese, with 24% of SA production shipped to the US, and 6% of US fluorspar imports originating from SA. These resources are fuel to US factories and energy production. Pretoria has wisely resisted weaponising these commodities, recognising their strategic value to US industries as strengthening its negotiating hand.
That said, Trump’s tariffs are a wake-up call for SA, a blunt reminder of the urgency of accelerating tariff reforms. A good place to start would be simplifying our labyrinthine tariff structure and boosting manufacturing output.
The US and SA officials are tossing around conflicting figures. The US insists its 31% is grounded in its calculations that SA is charging an effective 60% on US goods entering our shores, while SA insists it levies a modest 7.6% on average. That’s a wide gap. It’s as if Washington pulled the number out of a hat.
Of course, what complicates matters and potentially inflates the numbers are SA’s choices in global politics. Historically rooted in values of sovereignty, multilateralism and justice, SA’s claimed nonaligned stance has come under sharp scrutiny as the world becomes increasingly polarised.
The US has expressed concerns about our perceived closeness to Russia, the genocide case against Israel and, lately, Trump’s misleading crusade of protecting the rights of supposedly under-siege white Afrikaners. These geopolitical tensions cast a shadow over trade negotiations, adding layers of complexity to an already fraught environment.
Even so, SA’s approach to Trump’s tariff blitz offers a sobering counter-narrative in a world shaped by economic nationalism. By refusing to retaliate and instead focusing on reforms and multilateralism, Pretoria underscores the futility of trade wars. The fallout from Trump’s tariffs reveals what trade wars truly are: a lose-lose proposition where no participant, including the US, can emerge unscathed.
For SA, the question is whether its calculated gamble will secure long-term stability and favourable outcomes in an increasingly fragmented landscape. Far from being a sign of weakness, restraint reflects diplomatic and strategic maturity that is too often overlooked.
While the success of this approach remains uncertain, SA’s steadiness offers a lesson worth heeding: in the chaos of global trade wars, measured calm and thoughtful reform can be powerful tools.
Motsoeneng is Business Day’s acting editor
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.