The real pain for South Africa is still coming
With the 30% tariff on South Africa’s exports to the United States coming into effect this week, markets are under pressure, and businesses are starting to feel the sting.
However, economists say the tariff’s true impact will only start to be felt in the economy in 2026, meaning the strain being felt now is just a precursor to what lies ahead.
According to Investec Chief Economist, Annabel Bishop, while the tariff has now come into effect, the real impact won’t reflect in market data for months due to lag effects.
Bishop noted that South Africa’s exports to the United States account for about 7.5% of South Africa’s total exports. In turn, the largest category of SA exports to the US are precious metals.
This represents 36% of total exports to the US, which are mainly tariff-exempt, she said.
Because of the modest component of local exports going to the US, along with the substantial exclusions from tariffs, and the bulk of US tariffs only impacting South Africa’s export data in the second half of the year, the impact on overall export activity will be limited, Bishop said.
However, “from 2026 the full, direct impact from tariffs will become more apparent, given the leads and lags involved,” she said.
This will be on top of the bigger hindrance to export growth in South Africa, which is the insufficient performance of Transnet to meet export freight demand.
Still, as a commodity market with a commodity currency, South Africa will feel the pain of broader, global concerns in the segment.
Economic surveys from the United States indicate concerns and deteriorating confidence in various sectors, particularly commodities and manufacturing.
Bishop noted that business confidence about the year ahead has slipped to a three-month low, and the global manufacturing sector has slipped back into contraction.
“Early evidence for Q3.25 is showing concern over global manufacturing, limiting commodity prices and currencies, although early composite data for Q3.25 shows global economic growth is being supported by accelerating services activity,” she said.
More than just the tariffs
Economists have warned that South Africa stands to lose out not just from the direct impact of the tariffs, but also how they reverberate throughout the economy.
The 30% tariff is an import cost carried by US importers, which should see the inflation impact absorbed by US consumers.
However, job losses, business closures and restrained trade will hit South Africa. This has already been evidenced by numerous businesses that have reported being at risk of closure or losing millions in contracts just because the tariffs exist.
According to Bishop, these pressures are likely to cut South Africa’s GDP by about 0.2 percentage points in 2025.
This could be limited to around 0.1 percentage points if the government manages to strike a deal with Washington to lower the rates.
Even then, the global “minimum” tariff of 15% would still be in effect, as well as the 25% tariff of the auto sector, and the threat of a 10% “BRICS” tariff is also still hanging over our heads.
While 0.2 percentage points may seem like a relatively small hit to GDP, Efficient Group Chief Economist Dawie Roodt has warned that this isn’t South Africa’s only problem.
Troubles with Transnet, continued problems in the electricity sector, crumbling infrastructure, consumers under pressure, and collapsed service delivery are all factors chipping away at growth.
A hit to GDP, no matter how small, is something the country simply cannot afford, Roodt said.
With growth already likely below 1% this year, and stagnating at an average of 0.7% for the last decade, every “small” hit to the economy stacks up, and South Africa suffers.
The tariffs have also hit the rand and wider sentiment about South Africa, which has a knock-on effect on imports and things like fuel prices (which also go on to impact inflation).
Bishop noted that the US tariffs on automobiles and parts have already in effect since April, and this resulted in a sharp drop in these exports to the United States.
The economist noted that this has already been priced into the rand.
However, with the 30% for other goods taking place from 7 August, South Africa is likely to see added pressure filter through in the coming days, weeks and months as markets absorb the shifts.
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