Dawie Roodt warns of the real disaster hitting South Africa this week
Renowned economist Dawie Roodt has warned that the true disaster coming from the 30% tariff on South Africa’s exports to the United States this week will be a hit to economic growth.
South Africa is currently awaiting its D-Day on 1 August 2025, when the United States’ so-called “Liberation Day” tariff of 30% will apply to all local exports to the US.
Speaking on OntbytSake’s economic take, Roodt said that the full direct impact of the tariff is still to be determined.
While markets and analysts have a good idea of what the potential impact will be and which industries will be affected, how the tariff saga plays out is still up in the air.
The economist explained that the tariff is something that will be imposed on exports entering the United States, so it is not a cost to South Africa directly, but rather on US importers and consumers.
However, the pain for South Africa comes in at the price-point, because it makes local goods appear more expensive and thus less competitive to other producers.
“The US importer is the one who has to pay the bill. The impact (locally) is that the US will buy less from South Africa,” he said.
“It’s an interesting dynamic to see where the ‘tax’ will fall. Will South African producers lower their prices, or will US purchasers pay a higher price? That will determine where the inflationary pressure will lie.”
About 8% of South Africa’s exports are to the United States, which is also South Africa’s second-biggest trade partner.
The majority of South Africa’s exports to the US are precious metals (34%), vehicles and aircraft (17.3%), and iron and steel (16.6%).
Agricultural exports to the US are 4.6% of total exports to the US, rising to 7.8% if prepared foodstuffs are included.
About 37% of the exports are exempt from the tariffs, critical minerals and resources, but the automotive and agricultural sectors are expected to be hit hard.
While these industries are already reeling and urging the government to intervene before the 1 August deadline rolls around, Roodt said the true impact of the tariffs is still to be determined.
He said the net impact of the tariffs may even be relatively small. However, the real issue is the impact this will have on South Africa’s economic growth.
The true disaster for South Africa
Roodt noted that South Africa has been suffering from low and stagnating economic growth for over a decade, and things are only getting worse.
“At the beginning of the year, everyone was predicting economic growth of around 2%, but every time new statistics are released, this number declines,” he said.
Roodt said that South Africa is almost certainly going to report sub-1% economic growth in 2025, with his current prediction being a paltry 0.8%.
This is in line with projections from other economists, like Investec Chief Economist Annabel Bishop, who projects the GDP impact of the tariffs to be about 0.2 percentage points.
With most economists and analysts putting South Africa’s current GDP outlook at 1% for 2025, a 0.2 percentage point hit would take it down to 0.8%.
Roodt said that this is the real disaster for South Africa.
“What’s important to understand (about the tariffs) is that South Africa has shown stagnating growth for the last 15 years. On a per capita basis, South Africans are poorer than they were 15 years ago.”
He warned that, even though the tariffs’ impact may be relatively small, they are part of a much larger pile-up of problems impacting South Africa’s growth.
“Every small thing adds together, and eventually even a small impact becomes a big affair for South Africa’s economy,” he said.
Roodt said that South Africa could possibly scrape through with 1% or 1.2% GDP growth, but the likely outcome is lower.
“Even if the direct impact of the tariffs is relatively small, the small things add up, and every negative piece of information that comes out becomes a bigger hit to economic growth,” he said.
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