Huge relief as Trump pauses 30% tariff on South Africa

US President Donald Trump has announced that all tariffs on Washington’s “worst offenders” list will be walked back to the standard 10% rate applied globally – except for China.

Trump said that the walk-back or “pause” will apply for 90 days.

Posting to social media, the US president said that more than 75 Countries had made contact with representatives of the United States to negotiate a “solution” to trade barriers.

Due to this, he has authorised a pause on all tariffs exceeding 10% for the next three months.

However, with China, the US has opted to enter into an all-out trade war after it retaliated against the tariffs that took effect on Wednesday.

While all other tariffs will be reduced to 10%, the US will hike tariffs on China to 125%

Following the implementation of a 34% tariff on Chinese imports, China retaliated by imposing an 84% tariff on US imports. Things escalated even further on Wednesday, with the US pushing the tariff up to 104%.

“Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately,” Trump said.

“At some point, hopefully in the near future, China will realize that the days of ripping off the USA, and other countries, is no longer sustainable or acceptable.”

The tariffs wreaked havoc on global markets on Wednesday, with various analysts and economists calling a surefire recession for the United States as a result.

Arthur Kamp, Chief Economist, Sanlam Investments, said that even if tariffs are scaled back towards the baseline increase of 10%, this whole scenario was a material jolt to the global trade system.

Regarding the ongoing trade war with China, Kamp said that if this pattern continues, the implications would be dire.

Some relief for South Africa

The walking back of tariffs, albeit temporarily, will come as relief to South Africa, which faced a 30% tariff on key exports to the United States.

The tariffs were exacerbating local political volatility, putting extreme pressure on the rand.

The rand hit its weakest level in history against the dollar on Wednesday, trading at R19.93 to the dollar before pulling back to around R19.84 by the close of business.

Following the White House announcement, relief in the markets was immediate, with the rand recovering 2% to R19.34/$.