The passage of an act to extend the African Growth and Opportunity Act (Agoa) by the US House of Representatives does little to stabilise trade relations between SA and the US, and will not override last year’s tariffs.
Dr Saul Levin, executive director of Trade and Industrial Policy Strategies, told Business Times the recent support for the Agoa Extension Act is broader than South Africa’s participation, reflecting a shift in the current US administration’s approach to trade.
“From January 2025, when President [Donald] Trump came back into office, the signal has been that the US is not open for business; it was clear in his messages and proclamations that his administration wants to focus inwardly and throw up many barriers to international trade.
“This is not only reflected in the tariffs but also in its approach to trade agreements and global institutions that deal with international trade issues. The expiry of Agoa in September 2025, along with these other barriers, was a serious signal to African countries on the views of the US government toward Africa.”
This week, the US House of Representatives passed the proposed act through a 340 to 54 vote of support. The bill will proceed to the Senate for consideration and approval before it is sent to Trump for his approval, extending Agoa to 2028.
Levin said the current extension of Agoa that has been passed by the US Congress is in effect a “date change” on the existing Agoa legislation to overcome its expiration and retains the provisions of the original legislation. “[It] also gives the US president power over which countries are eligible to participate in Agoa. These provisions allow for the US government to remove countries from Agoa, so while South Africa has not formally been excluded from the current bill, it would take the stroke of a pen to remove us.”
He said Agoa had always been a unilateral trade measure by the US and not a bilateral trade agreement between the US and African countries, with its benefits remaining on the terms and conditions of the US.
“It seems unlikely that the current US and South African governments will be able to reconcile their differences. However, while trade is likely to continue and possibly even grow, as there’s a benefit to both countries, this will happen in a context of weak bilateral relations.”
It seems unlikely that the current US and South African governments will be able to reconcile their differences. However, while trade is likely to continue and possibly even grow, as there’s a benefit to both countries, this will happen in a context of weak bilateral relations.
Levin said the Trump tariffs supersede the Agoa tariffs, which nullifies some of the benefits of Agoa. But these tariffs are being challenged in the US Supreme Court, and a decision is imminent. If they are removed, it would increase the benefit of being part of Agoa.
Trade, industry and competition minister Parks Tau said in a statement that he welcomed the approval of the Agoa Extension Bill, proposing reauthorisation of Agoa with all beneficiaries included until 2028. “The renewal of Agoa will complement and support the implementation of the Africa Continental Free Trade Area and creation of regional value chains, as well as support American businesses that depend on inputs and products imported into the US market under Agoa.”
Tau said South Africa and the US continue to engage in negotiations for an Agreement on Reciprocal Tariffs, aimed at promoting mutually beneficial trade and investment relations and addressing trade barriers that affect bilateral trade.
According to the Sars data, South Africa-US total bilateral trade was $15bn (R25.6bn) in 2024, with South Africa’s exports at $8bn and imports at $7bn, resulting in a trade surplus of $1bn, dominated by South Africa’s exports of commodities.
The Agoa Extension Act, sponsored by Republican Congress member Jason Smith from Missouri, said: “A liquidation or re-liquidation may be made… with respect to an entry only if a request thereof is filed with the commissioner of US Customs and Border Protection not later than 180 days after the date of the enactment of this act that contains sufficient information to enable such commissioner to locate the entry or to reconstruct the entry if it cannot be located."
Dawie Roodt, economist at Efficient Group, told Business Times that while the extension of Agoa is good news, there’s no certainty or clarity on where South Africa stands as a trade partner to the US.
“We’re living in a world with far less certainty than in the past, because Donald Trump could still issue some executive order that will kick South Africa off the Agoa agreements, or even worse… So for now, [it’s] good news, but the moment that he gets angry, things could change again.”
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