Rand tanks as Trump brings the pain

The South African rand eyed R19 to the dollar late on Wednesday (2 April) after United States President Donald Trump signed new executive orders placing reciprocal tariffs on imports.

The announcement exacerbated the already tough day for the unit, where it faced high drama and political twists in the Government of National Unity (GNU).

While Trump announced a baseline 10% tariff on all US imports, 60 countries—including South Africa—were subject to higher rates.

Deemed the ‘worst offenders’, these countries had significantly higher trade imbalances with the United States, he said, warranting higher tariffs.

He said South Africa has been charging 60% tariffs on US goods, so the US would impose a 30% tariff on South Africa.

The Trump administration had previously talked up fully reciprocal tariffs, but the president said that the US would be “kind” and cut the tariffs in half.

Markets had been on edge all week waiting for the tariff structure to be announced, with the rand weakening significantly on their reveal.

The announcement compounded local issues, with markets already reacting negatively to a hotly contested budget vote that showed a gaping division within the GNU.

Markets are now doubly anxious about the future of the GNU after the business-friendly Democratic Alliance broke from the ANC in the vote to pass the budget, raising serious questions about its position in the coalition.

The rand had already given up around 1.3% against the dollar around the vote, about 30 cents.

However, this was pushed to R18.96/$ after Trump’s announcement, tanking almost 2.3% by 23h00.

Spot gold, meanwhile, advanced as the tariffs boosted haven demand. 

The metal has climbed 19% this year, extending a ferocious run in 2024, as investors seek safety amid concerns over the global economy and world order. 

Gold rose as much as 1% to $3,143.39 an ounce in late trading on Wednesday. 

Copper edged lower when Trump made the announcement as traders were concerned levies may hurt demand and drag down economic growth.