A bastardised spreadsheet formula that divides the US trade deficit with each country by its imports, adds some voodoo and spits out a number that now threatens to implode global trade.
US President Donald Trump has declared economic war on the world, as promised, and our leaders are arguing over VAT decimal points. If there’s one good thing that might come from Tariff Man’s trade war timing, it’s that it could force some common sense into our politicians.
SA has been slapped with a 30% tariff, up from effectively zero under the African Growth & Opportunity Act. And if that wasn’t insult enough, our neighbour Lesotho, whose per capita GDP hovers around $1,000, is being hit with a 50% tariff. America’s answer to re-industrialisation is to tax Lesotho denim and SA oranges. There is no economic logic here. This isn’t policy, it’s petulance with a flag.
The consequences have been swift. The S&P 500 has shed more than 17% since February. $5-trillion in global equity value vanished in just two trading sessions last week, with more trillions being added at the time of writing. The Nasdaq is in bear market territory, the Dow has corrected, and even the famously insulated Nikkei is at an 18-month low. Global oil prices have cratered. JPMorgan has downgraded US GDP growth to negative 0.3% for the year. Goldman Sachs now pegs the risk of a global recession at 60%.
While Trump torches the world economy, in SA the government of national unity (GNU), the most credible political arrangement SA has mustered in a generation, is on the brink of collapse. And over what? A half percentage point VAT increase. A R13.5bn adjustment in a R2.3-trillion budget. A rounding error, in effect, in the face of the R812bn we spend annually on the public sector wage bill.
The DA’s refusal to support the second budget vote has drawn fury from within the ANC. President Cyril Ramaphosa, rarely so blunt, told DA leader John Steenhuisen: “You want to be in government and the opposition in government. You can’t have your cake and eat it.”
But here’s where the narrative gets more complicated, and more revealing. Contrary to the ANC’s spin that the DA is simply being petulant, a leaked DA document titled “A way forward on budget 2025” reveals a very different story.
The DA’s ask was not just “don’t just raise taxes”, it was also “fix the economy”. And yet, according to the DA’s account the ANC rejected both its revenue alternatives and its conditional support. Instead of co-governing, the ANC has seemingly reverted to majoritarian muscle memory: our policies, our way. Only now it doesn’t have the votes. Twice the budget has failed. The crisis is self-inflicted. And it couldn’t come at a worse time.
While Trump’s wrecking ball careens through the global economy, our political elites are breaking the only platform we’ve got to stand on. Because make no mistake, the GNU, for all its imperfections, was working. A Brenthurst Foundation survey shows 57% of South Africans believe the GNU is performing well; 60% say it’s better than the ANC-only government it replaced. Support for both the ANC and the DA has grown since the 2024 elections. Even more striking is that 31% of voters favour the ANC-DA combo over all other coalition options.
Consider what’s now at stake. SA exported 25,543 vehicles to the US in 2024, a 30% jump from the previous year. Those exports, worth R35bn, now face a 25% tariff. Component exports will be hit in May. The auto industry supports 120,000 direct jobs and hundreds of thousands more across the value chain. It accounts for 5% of GDP, 22% of manufacturing output and 50% of Africa’s total vehicle production.
Add to that the citrus sector; SA is the world’s second-largest exporter and the US is a top destination. The sector employs tens of thousands, from Limpopo to the Sundays River Valley. Those farmers are now staring down the barrel of reduced margins and cancelled orders. And it’s not just trade. Investor sentiment is tanking. The rand is now bracing for further punishment. Goldman Sachs has cut SA’s 2025 growth forecast to 1.4%.
And yet here we are. Instead of doubling down on reforms and crafting a unified, strategic response to global turbulence, the GNU looks set to collapse under the weight of its own ego. The ANC is furious. The DA is defiant. And in the middle sits the SA economy, tied to the tracks, as the Trump train barrels closer.
Worse still, SA has no leverage in this global trade war. We make up just 0.25% of US imports. We’re not a priority. Our trade diplomats, already hamstrung by the Rasool debacle, will be lucky to even get a meeting.
This should have been a moment for unity, not disintegration. The DA’s reform conditions, whether one agrees with them or not, are not irrational. They’re the kind of fiscal realism that should have been baked into the budget in the first place. Yes, we need revenue, but we also need to signal to investors that SA has a plan to grow, not just tax and spend.
Trump’s tariffs may be the beginning of a new economic order, or just another chapter in his theatre of chaos. Either way, SA must choose whether it wants to behave like a country that can govern itself, or one that fumbles the moment, again.
Of course, the deeper issue is our growing fiscal hole and the need for more urgent growth reforms. But the better tactical choice would be to retreat and fight on the growth front ahead of the next budget while the trade and market storm passes.
This isn’t the time for righteous obstruction. It’s a time for political maturity. As one business leader put it: “A fight over 0.5% VAT seems puerile in the face of the challenge facing SA.”
• Avery, a financial journalist and broadcaster, produces BDTV’s ‘Business Watch’. Contact him at Badger@businesslive.co.za.
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