Exporters and the government are pinning their hopes on the potential renewal of the African Growth and Opportunity Act (Agoa) to soften the blow of US tariffs, but trade experts doubt the act will be extended.
Johann Kotze, CEO of AgriSA, said there was no certainty regarding the possible outcomes as negotiations continue. That said, if South Africa leveraged the strategic importance of its agriculture, the US could be convinced to extend the trade agreement when it expires at the end of this month.
“We still need to understand what is going to happen. But everyone we spoke to, there was not one American who did not favour Agoa. Not one. So, hopefully, we’re going to see, maybe, a different form. Maybe not Agoa as [it] is, but hopefully there would be a leeway into the concept that will help us out,” said Kotze, speaking at the National Maize Producers SA (Nampo) conference in Bredasdorp, Western Cape, on Thursday.
His remarks come amid ongoing talks between Washington and Pretoria to secure a trade agreement framework after the US imposed a 30% unilateral tariff on South African goods, which had the effect of nullifying the agreement that ensured duty-free access to the US for goods and products from select African countries.
Chrispin Phiri, spokesperson for the department of international relations & co-operation, said in its ongoing engagements with the US, South Africa was inquiring how a renewed Agoa could possibly be mitigated by President Donald Trump’s tariffs.
“That’s a matter that’s still being discussed with a number of our US counterparts. The tariffs do have an impact on Agoa because they do affect all of the African countries that trade with the US,” he said.
Kaamil Alli, spokesperson for the department of trade, industry & competition, said: “We are in conversation with our counterparts in the US. Naturally, South Africa’s inclusion in Agoa would be beneficial, but we would need to understand from them what it means in the context of the unilateral tariffs.”
Saul Levin, executive director of trade and industrial policy strategies, expects the trade pact not to be renewed under Trump. He said the approach taken by the current US administration to tariffs has effectively nullified the Agoa preferences that were given to most African countries.
“As Agoa is a unilateral measure by the US government, it is unlikely that they will renew it under the current administration.
“We are now seeing the US preferring to negotiate with individual countries, the aim of which is to improve access into their markets rather than give access to the US market. They’re also requiring investment into the American economy rather than fostering investment into other regions such as Africa,” he said.
Donald Mackay, founder of XA Global Trade Advisors, said while it was not likely that Agoa would be renewed to the extent that it would completely undo the impact of the tariffs, it was worth negotiating the current tariffs down to below 30%.
I see very close to zero chance of anything like Agoa materialising, and although a deal might be possible, it will never get us close to where we were before, but at the same time, it doesn’t need to. If we can get our tariffs reduced to 15%, which is where most of our competitor countries are, we will be able to manage
— Donald Mackay, founder of XA Global Trade Advisors
“I see very close to zero chance of anything like Agoa materialising, and although a deal might be possible, it will never get us close to where we were before, but at the same time, it doesn’t need to. If we can get our tariffs reduced to 15%, which is where most of our competitor countries are, we will be able to manage,” he said.
According to the Institute for Agriculture and Trade Policy (IATP), Agoa can be extended through the passage of a Bill in the US Congress determining its renewal or extension. In recent years, the extension of the trade agreement has enjoyed bipartisan support in Congress.
In 2023 Republican senator John Kennedy introduced the Agoa Extension Act, which would reauthorise its extension for 20 years through to 2045. Democrat senator Chris Coons circulated the Agoa Renewal Act in the same year, which proposed an extension from 2025 to 2041.
However, sentiments have since soured, especially among the Republicans, with the Committee on Foreign Affairs in the US Congress passing the US-SA Bilateral Relations Review Act in August.
The Act, introduced by Republican Representative Ronny Jackson, clears the way for a complete review of bilateral ties between the two countries, and advocates for the ANC to be regarded as an organisation eligible for economic sanctions.
Rico Basson, CEO of SA Wine, said while some experts argue that total South African agriculture exporters’ exposure to the US market is only 5%, at different levels, certain companies have an exposure to the US of 50% to 60%.
“We’re not going to go sell elsewhere suddenly, and the truth is that most sectors have been diversifying anyway for a number of years. For me, the killer is the uncertainty, because the uncertainty means that people cannot plan and they cannot operate,” he said.
He said huge companies have either shipped “massive volumes before the tariffs came in, and traded from that low goods margin for the next six months. He said the endgame of this saga needed a new mutual trade arrangement with the US.
Daneel Rossouw, head of agricultural sales at Nedbank, said industries like table grapes, nuts, and citrus have high levels of exposure to the US market.
“Obviously the 30% tariff does have quite a significant impact. If you look at our competition from the southern hemisphere countries, Chile and Peru, both sitting on 10%, might make it a bit more lucrative for them to take up shelf space that we actually supplied to in the past,” he said.
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