Alex Whyte, director of the Green Farms Nut Company near White River in Mpumalanga, is bracing for impact as the shock of US President Donald Trump’s 30% tariffs on most exports from South Africa slowly sinks in.
The US is the second-biggest export destination for South Africa’s macadamia nuts after China, and the higher tariffs — to be implemented on August 1 (if the government fails to strike a separate trade deal with the Trump administration) — will see the average price of a macadamia kernel rise from $12 (about R215) a kilo to $15,60 (about R280).
“[The US] represents about 20%-30% of total macadamia exports [or] about 6,000-8,000 tonnes of kernel,” Whyte said in response to questions from Business Times.
He expects the tariffs to make South African macadamias less price-competitive in the US compared to those from other producer nations such as Australia and Kenya, which were only hit with a 10% tariff.
“Users of macadamias would look to source more from these countries and less from South Africa, [which] is going to have to increase sales in current markets outside the US and establish new markets quite quickly,” Whyte said.
But this could be a blessing in disguise. Whyte notes that if the US starts sourcing more macadamia nuts from Australia or Kenya, this could open up space for South Africa to find new markets in countries these two traditionally supplied but may no longer have enough stock to satisfy demand as they focus more on the US.
“I believe Australia will export more to the US in the future. This will mean they will not have enough volume to supply some of their traditional markets like Japan, Korea, Thailand and a number of Middle Eastern countries. This should allow South Africa to fill this void.”
Asked what immediate impact US tariffs would have on his business, Whyte said there were no immediate plans to downscale operations or retrench employees as they had no carry-over crop.
“Our industry is in a relatively strong position with no carry-over crop and a global crop that is less than expected. The impact of the tariffs is not fully known, and as South Africa has an excellent reputation regarding quality our macadamias are well received, so we don’t want a knee-jerk reaction, as there is no need to panic.”
“There is, however, work to be done. The South African industry will continue to grow due to young trees coming into production, so in the short term I don’t see major retrenchments.”
Whyte warned, however, that the risk to jobs would only materialise if the tariffs pushed down the farmgate price of macadamias over the medium to long term, and production was no longer profitable.
Trump announced in a letter addressed to President Cyril Ramaphosa that most goods from South Africa would be subject to a 30% tariff from August 1. This effectively nullified the African Growth and Opportunity Act (Agoa), which guarantees duty-free access to the US for most goods and services from Africa, including macadamia nuts from South Africa.
Other hard-hit South African exports include vehicles and auto parts, citrus products and wine.
Pretoria had hoped to strike a last-minute trade deal with Washington after Ramaphosa’s visit to the White House in May.
Agriculture minister John Steenhuisen told parliament this week that the government was not giving up on securing a deal before the 30% tariffs kick in.
“Now, more than ever, it highlights the need for urgent reform in South Africa so we can ensure that our economy meets the requirements of our trading partners around the world, and I look forward to working with trade & industry minister [Parks] Tau and others in the coming weeks to urgently seek a way through this impasse and ensure that we can avoid the 30% tariff for our agriculture sector,” Steenhuisen said.
In the $13.7bn of agricultural exports of South Africa to the world in 2024, how much of that goes to the Brics countries? They account for less than 10% of our agricultural exports
— Wandile Sihlobo, chief economist at the Agricultural Business Chamber of South Africa
Kurt Reiman, head of fixed income and POTUS47 coverage lead at UBS Global Wealth Management, said he had three scenarios in mind for how things might progress between the US and its trade partners, namely fresh negotiations, extensions for countries negotiating in good faith, and the threat of a snapback to reciprocal tariffs.
“We ended up getting a combination of two and three extensions for all countries to August 1 to continue to hash out the negotiations. I would say that the letters and tweets were ... the same threat, different goalpost,” he said.
“Was it negative for markets that investors concluded that more deals would have been forthcoming, and without those deals perhaps the negotiations are going in the wrong direction? I think it’s important to think about the way deals or frameworks for deals may progress from here, and the two we have so far couldn’t be any more different than the UK and Vietnam deals.”
Wandile Sihlobo, chief economist at the Agricultural Business Chamber of South Africa (Agbiz), said increasing trade with Brics countries would not be an adequate replacement for the US consumer market for agricultural goods. Even as the original Brics grouping spent more than $200bn importing food products, South Africa still represented a small subset of this figure.
“At this moment, it lacks economic ambition. It is an important grouping of countries. When you look at it, it accounts for roughly half of global agricultural trade. But ... in the $13.7bn of agricultural exports of South Africa to the world in 2024, how much of that goes to the Brics countries? They account for less than 10% of our agricultural exports.”
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