Amid the outcry over US President Donald Trump's tariffs it’s worth reflecting on our recent history of protectionism. While everyone seems to agree SA must diversify its exports to cut its reliance on an increasingly unreliable US, few make the connection between SA’s already poor export performance and the tariff barriers it has erected over the past 15 years.
Trump promises his tariffs will boost manufacturing jobs and rebalance US trade with the rest of the world. Mainstream economists counter that the trade war he has unleashed will severely damage the US economy, which depends on its trading partners to provide inputs it can’t produce competitively, or at all. In a world of complex supply chains, the tariffs could cut exports at the same time as they cut imports.
All of which makes this a good moment to take a hard look at SA’s trade and industrial policies, and to ensure we take the right lessons from the trade war. As Reserve Bank governor Lesetja Kganyago put it in a robust response to a question from a steel industry executive at this week’s monetary policy forum: “We should be asking difficult questions and starting very difficult conversations as South Africans, about how do we become more competitive.”
The executive expressed concern that as the US market closed and other countries also raised tariffs, SA’s market would be flooded with imports that would kill productive capacity. Kganyago pointed out that SA had been imposing tariffs since 2009, and in 2025 industries were still complaining. SA should not even think of responding to the US by imposing more tariffs: it had to build its competitiveness.
It was when SA was opening up to trade and taking down its tariff barriers in the early days of democracy that it was best at growing exports, especially manufactured exports, which rose as imports did. Exports have essentially flatlined since then, as has manufacturing. And the government’s pivot to far more inwardly focused industrial and trade policies after 2007 has, if anything, made things worse.
Where in the late 1990s the government slashed tariffs and forged preferential trade pacts, that was halted or reversed, with the trade regulator ever more willing to say yes to special pleading for anti-dumping and other duties. Along with all that went the government’s aggressive push for localisation.
A World Bank study last year found SA’s bundle of exports diversified markedly between 1992 and 2004, with manufactured goods increasing their share of exports. But since 2010 exports have lagged, with SA’s goods and services export performance underperforming other middle-income countries by an ever-wider margin. In a recent conference paper, University of Cape Town’s Lawrence Edwards speaks of an export crisis.
Over the past decade exports have decreased as a share of the economy. The number of exporters has dropped, with just a few companies accounting for the export value. The number and diversity of exports has declined too: SA mostly exports metals and minerals; even manufactured exports, other than automotive, are now mostly resource related.
SA’s inability to provide reliable and cost-effective electricity, rail and port services all played a big part in this, as did other regulatory red tape weighing on competitiveness and innovation. The World Bank and economists such as Edwards argue that SA’s policy focus on promoting local industries has come at the expense of competitiveness and penalised export performance.
In a complex global economy, imports — of skills, technology, capital and intermediate goods — make countries more competitive, not less. The US may be about to learn that lesson the hard way. To survive the fallout SA will need to try to hold on to existing export markets and seek new ones. But many countries will be doing the same, and SA will not succeed unless it is willing to ask difficult questions about its failed policies.
• Joffe is editor-at-large.
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