Businesses in South Africa downplay loss of AGOA
The Trump administration’s decision to exclude South Africa from the African Growth and Opportunity Act will have a “minimal impact” on the economy as a whole, according to business leaders and economists.
It will, however, likely result in some job losses in the agriculture and automotive industries.
“While only about 10% of South Africa’s exports to the US are currently subject to AGOA, South Africa’s exit still puts thousands of jobs at risk in these sectors,” Raymond Parsons, an economics professor at North West University’s Business School, said on Tuesday, a day after the decision was announced.
Pretoria played down the likely impact of the exit, noting that the scale of trade directly affected by AGOA was small. South Africa’s financial markets took the news in their stride.
“The disappointment was to a large extent anticipated,” said Alvin Chawasema, head of fixed income at Otto1890 in Johannesburg, who pointed to larger concerns for investors, including the ongoing Iran war.
“It could well be that markets are rationally assigning some residual probability to further negotiation.”
Higher trade levies imposed by President Donald Trump since he returned to power last year have in any case diminished AGOA’s value to South Africa.
“Much of the benefit of preferential access has already been eroded by existing US tariffs,” the Bureau for Economic Research said in a note.
But it added that the consequences for some manufacturers and suppliers “may be substantial even if the aggregate impact on the economy is relatively limited.”
The loss of preferential access “exposes South African citrus exports to the applicable US rate of duty, generally between 1.5 and 2.5 US cents per kilogram,” said Boitshoko Ntshabele, chief executive officer of the Citrus Growers’ Association of Southern Africa.
But exporters of certain citrus varieties are at a “severe disadvantage to competitors like Peru and Chile, who benefit from trade agreements as well as shorter transit times,” he said in a statement.
Trouble for some, but not for everyone
Business Unity South Africa, the nation’s largest business lobby group, said firms are “likely to experience weaker US demand, especially in key agricultural goods.”
But anticipated weaker sales in the US are likely to be offset by “deep underlying strengths.”
“In the year to August, farm and food exports to the US fell by 22%, but sales to other markets rose by 9% to $15.7 billion—an increase nearly ten times the US loss,” BUSA said in a statement, noting market diversification in response to Trump.
“The wider commercial, economic and investment relationship has not deteriorated, and we see the loss of preferential access in the new year as having no bearing on underlying ties.”
For South Africa-based automotive manufacturers, the Trump administration’s applications of tariffs in 2025 were more immediate for Mercedes-Benz Group AG, which has exported the low-margin C-Class model to the US from its plant in the Eastern Cape province since 1997.
Exports from the German manufacturer’s facility slumped in the third quarter of 2025 and haven’t recovered, according to industry body data, prompting the company to seek a partner to share its plant due to overcapacity.
BMW AG, which historically exported the Pretoria-built 3-Series compact sedan to the US, transitioned to manufacturing the X3 SUV for other markets in 2018.
“Jobs will be lost – the last thing South Africa needs in the midst of an employment crisis,” BUSA said. “But perspective matters: The number of jobs affected is likely to be in the range of a few thousand.”
A bigger concern was that “relations between our two governments deteriorate further.”
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