US tariffs bite on cars but PGM surge helps soften the pain

The US tariffs that took effect in August made their first appearance in South Africa’s quarterly balance of payments, but their overall effect was muted as total exports to the US rose in the third quarter.

The Reserve Bank noted in a response to Business Day on Thursday that while a big portion of mining products is exempt from tariffs, the effect was visible in certain sectors such as vehicles and transport equipment.

“The value of platinum group metals (PGMs) exported to the US increased sharply in the third quarter of 2025, largely benefiting from higher international commodity prices. As a result, the total value of goods exported to the US increased in the third quarter of 2025,” the Bank said.

However, “excluding precious metals (which are largely composed of PGMs), the total value of goods exported to the US declined, weighed down by the exports of vehicles and transport equipment, reflecting the impact of the US tariff”.

According to data released on Thursday, South Africa’s current account deficit shrank in the third quarter, mainly because the country paid out less in profits and interest to foreign investors.

The current account is the broadest measure of the country’s trade and financial dealings with the rest of the world. It captures what South Africa earns from exports and investment income and what it spends on imports, services and payments to foreign investors. A deficit means more money flowed out than came in during the period.

The deficit narrowed to R57bn, or 0.7% of GDP, from a revised R72.2bn (1.0% of GDP) in the second quarter.

The country’s trade surplus narrowed for the second consecutive quarter to R178.3bn, from R187.2bn previously. This meant South Africa paid more for goods coming in while earning relatively less for those it sold abroad. However, exports and imports of goods and services increased, rising R30.8bn and R50.7bn, respectively.

Merchandise imports rose to R1.89-trillion, while exports (including gold) climbed to R2.07-trillion. The increase in imports was due to higher imports of mining and manufacturing goods, the Reserve Bank said. “The larger contribution was mostly from the increase in the imports of mineral products (that is, the refined petroleum products and crude oil).”

The key driver of the narrower current account deficit was an improvement in the primary income account, in which the deficit shrank from R173bn to R137bn. “This was due to a combination of lower dividend payments and higher dividend receipts, the main driver being the lower dividend payments,” the Reserve Bank said.

South Africa earned more from its investments and work abroad, with income rising from R207bn to R219bn, while payments to foreign investors fell from R380bn to R356bn.

According to the data, the country spent more on services from other countries than it earned by selling services abroad, and the deficit on current transfers (which includes remittances and government payments abroad) stayed unchanged at R29bn.

The Bank noted that terms of trade (excluding gold) improved at a faster pace in the third quarter, with export prices continuing to rise more rapidly than import prices.

“The commodity prices that contributed the most include platinum, rhodium, palladium, iron ore, manganese ore, copper and chromium ore,” the Bank said. Export prices increased 0.6%, while import prices edged up 0.1%.

This helped offset a drop in net gold exports, which declined from R178bn in the second quarter to R149bn, contributing to the softening of the overall trade surplus.

“While the trade surplus has narrowed throughout the year, exports have nonetheless proved resilient, while imports have been softer than exports. As a result, the current account has been relatively steady, hovering near 2024 levels,” Nedbank economists said.

“Looking ahead, export volumes are unlikely to increase aggressively given that global demand is likely to remain relatively subdued and South Africa faces significantly higher tariffs in the US market than most of its competitors.”

According to Nedbank and Investec economist Lara Hodes, the trade surplus is forecast to narrow further in 2026.

Hodes quotes SA Revenue Service trade data showing “the surplus on the merchandise trade account narrowed at the beginning of the fourth quarter, underpinned by a notable lift in imports (7.2% month on month) while the value of exports increased modestly.”

According to Nedbank, “the non-trade account will remain in deficit as stronger domestic growth bolsters income payments. Services income is expected to rise in line with robust tourism. Altogether, the current account deficit is forecast to widen only modestly in 2025 but more noticeably in 2026.”

Update: December 3 2025.

This story has been updated with more comments.