The relief South African exporters won when the 30% reciprocal tariff imposed by US president Donald Trump was declared unlawful by the US supreme court in February was short-lived.
The reciprocal tariffs on all countries were immediately replaced by a uniform 10% duty that expired on July 24. Those have now been replaced by new tariffs imposed under Section 301 of the Trade Act of 1974 on countries deemed to have failed to prohibit trade in products made with forced labour.
South Africa falls in the group targeted at the higher 12.5% rate, despite the government seeking exemption during the public hearings hosted by the office of the US trade representative.
On the face of it, the additional 12.5% is a far better outcome than the 30% reciprocal tariff. But the reprieve is narrower than it appears.
Our estimates using highly disaggregated US import data suggest that replacing the 30% reciprocal tariff with the 12.5% Section 301 tariff only reduces the import-weighted average tariff on South African non-gold exports from 16.9% to 11.2%. Removing the Section 301 tariffs entirely would still leave the average at 7.4%, which is nearly 20 times the 0.4% average at the beginning of 2025.
There are two main reasons. First, the tariff increases exclude major US imports from South Africa, such as the platinum group metals (PGMs), citrus and gold. Exempted products cover over 40% of the value of US imports from South Africa.
Second, the Section 301 tariffs do not apply to vehicles, iron and steel, aluminium and copper products, which face separate Section 232 “national security” tariffs of 25%-50%. The 12.5% tariff therefore applies to only a fraction of the value of South Africa’s exports to the US.
Hidden effects
However, the aggregate story hides a lot. Over 80% of the roughly 2,700 products the US imported from South Africa in 2024 face the Section 301 tariff. These products are of low aggregate value, but the US is a major market for many of them. While exemption of the tariffs for these products would have mattered little to the total value of South African exports, it matters a great deal for most of the products South Africa sells to the US.
Using a highly disaggregated, product-level trade model (based on 2024 data), we project that the tariffs will cut South African exports directly affected by them by about $1.9bn (a 23% decline) under the proposed 12.5% tariff, down from $3.5bn (42%) under the 30% reciprocal tariff. The number of jobs threatened, directly and indirectly, drops from about 87,700 to 45,500 — still a major hit, and one that falls disproportionately on women.
Vehicles are hardest hit, not by the Section 301 tariffs but by the 25% Section 232 tariffs, with exports to the US predicted to fall by 58%. Chemicals and basic metals are also strongly affected.
Our results also highlight the importance of the gap between the tariffs SA exporters face and those faced by their competitors. More than half of the projected export losses arise not because SA goods become “unsellable”, but because US buyers switch to suppliers facing lower tariffs.
This is principally due to Mexico and Canada, whose exports to the US are generally exempt from the tariff increases under the USMCA free trade agreement. The additional exemptions from – and, for some countries, caps on – the Section 301 tariffs, granted for selected products from Argentina, Cambodia, Ecuador, El Salvador, Guatemala, the EU, Taiwan and the UK, among others, will exacerbate these diversion effects.
The recent collapse of trade talks and imposition of US tariffs on Canada will attenuate the trade diversion attributable to Canada, but the trade diversion with respect to other countries remain. One of South Africa’s most valuable objectives in any future negotiations is, therefore, to narrow the tariff differential, not merely to lower the bilateral rate.
There is also a longer-term concern. The products so far exempt from Trump’s tariffs are concentrated in raw materials (PGMs, ferrochromium and the like), while manufactured products, including the vehicles and chemicals SA has spent decades attempting to grow, have been disproportionately targeted. The US tariffs are thereby reinforcing the commodity dependence of South Africa’s export bundle.
Damaged but resilient
How bad has the damage been so far? US trade data for 2025 provides a first look at the impact of the 30% reciprocal tariff, and they confirm our model’s predictions.
Excluding platinum, whose near-doubling price masked the decline in aggregate imports, the value of US imports from SA affected by the tariff increases fell by $1.4bn (66%) between September and December 2024 and the same period in 2025. US imports of vehicles fell by 72%, and the range of products the US bought from SA shrank by 16%. The damage has been broad-based and severe.
The South African economy as a whole remains resilient. Exports directly exposed to the tariffs amount to a little over 1% of GDP, and many exporters will deflect sales to alternative markets. But specific sectors, firms and workers that depend heavily on the US market remain vulnerable, and a response calibrated to the national average will understate the disruption absorbed by the communities that depend on these exports.
Several policy priorities follow. Engagement with the US trade representative should continue, with the aim of reducing the tariff level and narrowing South Africa’s tariff differential with its competitors on the products Section 301 covers. Renewal of the African Growth And Opportunity Act should also be prioritised.
Over the longer term, reinvigorating the dormant SA-US Trade And Investment Framework Agreement and addressing US-identified impediments to trade may unlock opportunities and go some way to mending a fractured bilateral relationship. That may open the door to reductions in the Section 232 tariffs, which in the case of vehicles have been particularly detrimental.
Beyond the US, South Africa needs to diversify its export markets towards fast-growing Southeast Asia, the rest of Africa through the African Continental Free Trade Area, and the EU, where preferential access already exists. Further, it is critical to tackle the unreliable network industries (rail and ports) that leave exporters exposed to external shocks.
The immediate task is clear. What is at stake is not simply a 12.5% tariff. It is the gap between what South African exporters pay and what their competitors pay. Narrow that gap, and the damage will be contained.
Chien is a lecturer and research associate; Edwards is director of policy research in international services and manufacturing at the University of Cape Town’s School of Economics.
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