The relationship between SA and the US has long been complex, yet economically vital. The US is a major export market, source of foreign investment and a provider of employment opportunities for South Africans.
However, navigating this relationship involves balancing the need to protect these benefits while reducing overdependence by strengthening ties with other global partners.
About 600 US companies operate in SA, many using it as a base for broader regional operations. The stock of US investment in SA is valued at about $7.5bn (R137bn). The US is SA’s second-largest export destination (after China) and fourth largest import partner (after China, India and Germany). In 2023, exports to the US contributed about 2.2% to SA’s GDP, supporting about 426,000 jobs in the fourth quarter.
Despite the significance of this trade, the relationship is asymmetrical. SA represents less than 1% of total US imports, though it plays a critical role as a supplier of strategic minerals essential to US industries — especially hi-tech manufacturing. SA supplies nearly all US chromium imports, over a quarter of its manganese and platinum, and considerable quantities of titanium slag. This mineral dependency provides SA with strategic leverage and maintains its relevance in US foreign policy discussions.
SA’s trade with the US is governed by several agreements, most notably the African Growth and Opportunity Act (Agoa). In 2024, SA was the leading source of non-energy Agoa imports to the US, predominantly automotive goods. Exports under Agoa and the generalised system of preferences make up about 22%-25% of SA’s total exports to the US.
However, the country’s preferential access under Agoa is now under threat. Though macroeconomic models suggest a relatively minor effect on GDP — an estimated decline of 0.06% — this aggregate hides the disproportionate effects on specific sectors and regions, especially those focused on industrial diversification and international competitiveness.
Agoa uncertainty is compounded by new US tariff strategies. On April 1, US President Donald Trump announced a new “reciprocal tariff” approach: a universal 10% tariff on imports (excluding Canada and Mexico) and country-specific tariffs based on trade balances. While these tariffs don’t explicitly target SA, a 30% tariff has been levelled in line with the formula. Automotive, steel and aluminium products now face a 25% tariff, in line with global rates.
These tariffs are expected to affect SA exports — about $3bn (R54bn) or 3% of total exports. About half of these affected exports fall within the automotive, steel, and aluminium sectors, subject to 25% duties. The rest face either the 30% or base 10% rate. At the macro level, GDP could decline by up to 0.3 percentage points. Though not catastrophic nationally, the damage to industries such as automotive and agriculture — top exporters to the US — could be severe.
Automotive exports accounted for 64% of SA’s Agoa exports in 2024. Bilateral automotive trade with the US totalled R50.7bn that year, with the US representing 10.7% of SA’s total automotive export volume. This sector supports more than 110,000 direct jobs and more than 500,000 indirect jobs. Loss of competitive access to the US market could severely affect employment and profitability.
Agricultural exports are similarly at risk. In 2024, SA exported $13.7bn worth of agricultural goods, with the US market accounting for $488m, 4% of total agricultural exports), focused mainly on citrus, grapes, wine, and fruit juices. A 30% tariff on citrus, for example, risks displacing SA farmers in favour of Chile and Peru, both facing only 10% duties.
The 30% tariff has been paused for 90 days, and the eventual rate remains uncertain. This underlines the need to restore strong, stable ties with US decisionmakers. A co-ordinated diplomatic response is now urgent.
The situation also illustrates the necessity of trade diversification. According to a small poll among members of Business Leadership SA (BLSA), 92.9% believe that restoring ties with the US is crucial for growth; of these, 71.4% agree that pursuing new markets is equally urgent.
There have been encouraging signs from the government. The trade, industry & competition department is promoting unity in its engagements with the US, supported by new special envoy Mcebisi Jonas. Agriculture minister John Steenhuisen has confirmed that a high-level committee — comprising himself and ministers Parks Tau and Ronald Lamola — is actively negotiating for tariff relief while exploring other export markets.
Opportunities exist both in Africa and beyond. The African Continental Free Trade Area offers the chance to expand intra-African trade, which was valued at $15.1bn in 2022. SA remains the continent’s most industrialised economy and a leading intra-African exporter. In 2023, total trade equalled 65.18% of GDP, and export volumes reached $154bn, placing SA 34th globally.
However, the domestic market is too small to absorb SA’s high-value exports. Engagement with global markets — particularly affluent regions — is vital to job creation and long-term economic growth. SA’s location, infrastructure and industrial capacity provide a strong base for becoming an attractive destination for global investment, provided reforms are sustained and investment barriers — especially red tape — are addressed.
Partnerships beyond the US are showing promise. The UAE is now a leading trading partner, accounting for 8% of Africa’s non-oil trade with the country. In 2014-24, UAE-based firms initiated 28 foreign direct investment (FDI) projects in SA worth $23.6bn in capital expenditure. SA’s exports to the UAE rose 6% in 2024, reaching $2.6bn.
China is also opening its market. Ambassador Wu Peng recently welcomed more SA agricultural and industrial goods into China, with preliminary talks under way with fruit and citrus exporters. This signals growing trade prospects in Asia.
Meanwhile, trade with the EU continues to grow. Total trade between SA and the EU has increased by 44% over the past five years. The EU is SA’s largest FDI partner, contributing 41% of total FDI. More than 2,000 EU companies operate in SA, supporting more than 500,000 direct and indirect jobs.
To maximise these opportunities, SA must continue to position itself as a reliable, reform-orientated, investor-friendly nation. Diversifying trade is crucial for resilience, but this should not come at the cost of neglecting traditional partners such as the US.
The economic ties with the US remain strategically vital. As such, a unified, urgent national response is essential to safeguard our export interests and economic stability. The upcoming meeting between President Cyril Ramaphosa and Trump offers an important moment to reset bilateral relations and refocus on mutual economic benefit.
SA faces challenges from external pressures, particularly US trade policy, at a time of domestic economic vulnerability. Meeting these challenges requires a clear focus: repairing strategic relationships, strengthening internal reforms and expanding global trade to build a more resilient economic future.
• Mavuso is CEO of Business Leadership SA.
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