{"id":801232,"date":"2024-11-25T14:00:00","date_gmt":"2024-11-25T12:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=801232"},"modified":"2024-11-25T13:31:49","modified_gmt":"2024-11-25T11:31:49","slug":"r72-billion-axe-hanging-over-south-africas-neck","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/801232\/r72-billion-axe-hanging-over-south-africas-neck\/","title":{"rendered":"R72 billion axe hanging over South Africa’s neck"},"content":{"rendered":"\n

If US president-elect Donald Trump’s tariffs pledge comes to fruition, it could add to the challenges faced by South Africa’s major employers, such as manufacturing, motoring, and agriculture.<\/p>\n\n\n\n

South Africa\u2019s economy faces another daunting challenge as Allianz Trade, a trade credit insurance arm of German insurer Allianz, warns<\/a> of the potential fallout from Donald Trump\u2019s anticipated return to the US presidency.<\/p>\n\n\n\n

The company estimates that South Africa\u2019s exports to the US could shrink by as much as $4 billion (R72 billion) during 2025 and 2026 if Trump enacts sweeping tariffs as pledged.<\/strong><\/p>\n\n\n\n

This scenario would disproportionately impact industries already under strain, particularly car manufacturing, mining, and agriculture.<\/p>\n\n\n\n

In a report assessing the global trade implications of a second Trump presidency, Allianz Trade foresees a “challenging period” for South Africa’s export landscape. <\/p>\n\n\n\n

The company anticipates the imposition of a 5% tariff increase on imports into the US, excluding key trading partners like China, Canada, and Mexico. <\/p>\n\n\n\n

For South Africa, this could lead to retaliatory trade measures and considerable export losses<\/strong>.<\/p>\n\n\n\n

Certain exports, like precious metals and chemicals, may be less affected due to their critical importance to US industries. <\/p>\n\n\n\n

Platinum, which accounted for $5 billion (R90 billion) of South Africa\u2019s exports to the US in 2023, is expected to retain some resilience. <\/p>\n\n\n\n

However, sectors like metals, manufacturing, machinery, and agriculture are expected to bear the brunt of the tariffs. <\/p>\n\n\n\n

Exports of aluminium and iron, valued at $1.5 billion (R27 billion), as well as manufactured goods such as cars ($1 billion or R18 billion) and machinery ($600 million or R10.8 billion), are projected to take significant hits. <\/p>\n\n\n\n

Agriculture, which accounts for about $350 million (R6.3 billion) in exports, could also see a marked decline.<\/p>\n\n\n\n

The automotive industry, already grappling with multiple challenges, is particularly vulnerable, as outlined by several reports<\/strong><\/a>. <\/p>\n\n\n\n

The sector is crucial to South Africa’s economy, directly employing over 110,000 workers and supporting around 500,000 jobs across the value chain.<\/p>\n\n\n\n

However, it has faced declining domestic demand as more consumers turn to used vehicles and export markets soften. <\/p>\n\n\n\n

Additionally, the global transition to electric vehicles (EVs) poses a significant threat. <\/p>\n\n\n\n

While international markets pivot towards EVs\u2014spurred by the European Union\u2019s impending ban on internal combustion engine vehicles by 2035\u2014South African manufacturers have been slow to adapt, risking obsolescence.<\/p>\n\n\n\n

Manufacturing, a vital pillar of South Africa\u2019s economy, is similarly at risk. <\/p>\n\n\n\n

The sector has been on a steady decline, with output shrinking by 5% since 2019. <\/p>\n\n\n\n

Between April 2023 and March 2024, the industry shed 50,000 jobs, bringing total losses to 150,000 since the pre-pandemic period. <\/p>\n\n\n\n

Sub-sectors like automotive, glass, and non-metallic minerals have been particularly hard-hit, exacerbating unemployment in a country already battling high joblessness rates.<\/p>\n\n\n\n

Agriculture, while a rare bright spot with 13.5% growth in early 2024, also faces a precarious future. <\/p>\n\n\n\n

The sector\u2019s performance will not only be undermined by the increased tariffs but also by domestic issues.<\/p>\n\n\n\n

The sector has faced persistent challenges in 2024, including logistical inefficiencies, climate-related risks, and outbreaks of animal diseases.<\/p>\n\n\n\n

Water shortages, exacerbated by poor infrastructure and a failing water supply system, further compound the risks to agricultural productivity.<\/p>\n\n\n\n

Despite its crucial role in employment and food security, the industry\u2019s long-term outlook remains uncertain.<\/p>\n\n\n\n

These pressures on manufacturing, mining, motoring, and agriculture strike at the heart of South Africa\u2019s economic fabric. <\/p>\n\n\n\n

Together, these industries are not only significant contributors to GDP but also key employers. <\/p>\n\n\n\n

Any additional strain, such as the projected export losses from US tariffs, could deepen the country\u2019s socio-economic challenges, increasing unemployment and widening inequality.<\/p>\n\n\n\n

In this context, Trump\u2019s tariff policies loom large as a potential tipping point for South Africa\u2019s biggest employers. <\/p>\n\n\n\n

The next few years will demand strategic foresight and decisive action to mitigate these risks.<\/p>\n\n\n\n

\n\n\n\n

Read: Shoprite and Pick n Pay\u2019s next power moves<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Allianz Trade warns that South Africa faces significant risks as a result of Donald Trump’s return to the US presidency.<\/p>\n","protected":false},"author":92,"featured_media":801277,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[20637,21080,3387,2319,853,20932],"class_list":["post-801232","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-agriculture","tag-automotor","tag-manufacturing","tag-mining","tag-south-africa","tag-trump"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/801232","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=801232"}],"version-history":[{"count":6,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/801232\/revisions"}],"predecessor-version":[{"id":801285,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/801232\/revisions\/801285"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/801277"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=801232"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=801232"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=801232"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}