The recent tariff increases implemented by the US on South Africa and globally have sparked numerous inquiries about how to adapt to this new reality and what potential opportunities may arise.
South Africa is facing a 10% common import tariff along with an additional 30% reciprocal tariff due to its trade surplus with the US. On the other hand, the country applies a 7.6% tariff on goods coming from the US, along with an additional 8.5% tariff specifically for agricultural imports.
The US is our third-largest trading partner, accounting for 5.7% of total exports and 7.2% of total imports. In 2024, imports from the US amounted to R120bn. From an export standpoint, South Africa sent R156bn in goods to the other side.
The US has excluded platinum group metals (PGMs), coal, gold, manganese and chrome from the tariffs imposed. Nonetheless, items like precious metal jewellery, diamonds, iron and steel will incur a 30% reciprocal tariff.
Those exports facing the most significant tariff effects include vehicles, agricultural goods such as citrus fruits, grapes and wines.
In 2024 vehicle exports to the US reached R35bn or 6.5% of overall car exports from this country.
Agricultural products sent to the US during that time accounted for 4% of South Africa’s overall agricultural exports, totalling R10bn. Jewellery made from precious metals, along with diamonds, iron and steel sent to the US, amounted to R7.3bn.
Tariff hikes often lead to significant disruptions in supply chains, driven by rising input costs, delays in acquiring raw materials and a general slowdown across the value chain. From an exporter’s viewpoint, increased taxes result in elevated prices, diminished demand for the products offered, decreased sales and a decline in market share. It is common to observe exporters broadening their range of export destinations under these circumstances.
What are the possible prospects that may emerge, despite the current climate of significant uncertainty and fluctuations in trade?
The leading markets for South Africa’s lightweight vehicles are Germany, the UK, Japan, Italy, France, US, Spain, Belgium, Poland and Australia.
Germany and the UK are set to remain key destinations for our light weight vehicles. However, an expansion into markets such as Japan and various European nations is anticipated.
The African Continental Free Trade Area is expected to create additional opportunities for South African vehicle exporters across the continent
South African vehicle exporters are urged to capitalise on the economic ties within the Brics group to boost exports and enhance their market presence. Although the current vehicle export volumes from this country to the Brics group are minimal, there is an opportunity for expansion as South Africa is already exporting vehicles and components to Brazil.
In recent years there has been a notable rise in the export of medium and heavy vehicles to Zimbabwe, Zambia, Mozambique and Malawi — with export volumes for this category now exceeding those directed towards Europe, US, Mexico and Canada.
The African Continental Free Trade Area (AfCFTA) is expected to create additional opportunities for South African vehicle exporters across the continent. However, advancements in this area will significantly rely on the establishment of sufficient infrastructure and the execution of favourable policies and initiatives as outlined in the AfCFTA agreement.
In 2024 South Africa’s agricultural exports were distributed across various regions:
- Africa (44%);
- Asia and the Middle East (21%);
- Europe (19%);
- the Americas (6%); and
- the rest of the world (10%).
Of agricultural products sent to the Americas, the US accounted for 4%. Although this represents a minor segment of our overall agricultural exports, the rise in tariffs will influence the total exports in this industry.
It is advisable for South Africa to enhance its agricultural exports to the Brics nations (China, India, Saudi Arabia and Egypt) as well as to other key markets, including South Korea, Japan, Vietnam, Taiwan, Mexico, the Philippines and Bangladesh. The regions of Africa, especially Botswana, Namibia, Mozambique and Zimbabwe, along with Asia, the Middle East and Europe, will continue to be vital for South Africa’s agricultural sector.
The leading destinations for South Africa’s mineral and metal exports comprised of China, the US, Germany, the UK and India. The Minerals Council South Africa expresses worry regarding the US tariffs and the negative effects they have on the affected goods. In this sector, the aforementioned markets will continue to be significant export destinations, alongside Japan, the Netherlands, Mozambique, Botswana, South Korea and Belgium.
• Mtshali is head of product, documentary trade and supply chain finance (SA) at Standard Bank CIB
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