Renowned economist Dawie Roodt said South Africa\u2019s markets are behaving strangely, contrary to what one would expect considering the actions of the United States.<\/p>\n\n\n\n
Over the last few weeks, United States President Donald Trump and his allies have criticised South Africa\u2019s Expropriations Act, black empowerment rules, and race-based policies.<\/p>\n\n\n\n
Earlier this month, Trump signed an executive order formalising his earlier announcement that he would freeze assistance to South Africa.<\/p>\n\n\n\n
Joel Pollak, the frontrunner to become the United States Ambassador to South Africa, warned that this is only the start.<\/p>\n\n\n\n
He said more action is possible should South Africa not listen to the United States and take action on the issues highlighted by President Trump.<\/p>\n\n\n\n
Pollak fears that it may lose its African Growth and Opportunity Act (AGOA) benefits unless South Africa acts on these issues.<\/p>\n\n\n\n
He added that South Africa could also face tariffs and even sanctions from the United States, which can have devastating consequences for the economy.<\/p>\n\n\n\n
In 2024, South Africa exported goods worth R157 billion to the United States. The biggest exports were precious metals and vehicles.<\/p>\n\n\n\n
Over the last year, South Africa imported goods worth R120 billion, including machinery, mineral products, vehicles, and aircraft.<\/p>\n\n\n\n
This means South Africa has an extremely valuable trade surplus of R36 billion with the United States.<\/p>\n\n\n\n
Roodt said losing its AGOA benefits from the United States could cost South Africa 0.2 percentage points in economic growth.<\/p>\n\n\n\n
However, the biggest risk is that the United States will stop supporting South Africa\u2019s capital markets, which will be very painful.<\/p>\n\n\n\n
He explained that the Americans and Europeans are by far the biggest investors in the South African markets.<\/p>\n\n\n\n
\u201cSouth Africa\u2019s capital markets are very liquid and very easy for foreigners to access. It also provides a good yield,\u201d he said.<\/p>\n\n\n\n
Preventing the United States from investing in the capital markets will be far more damaging to the South African economy than losing its AGOA benefits.<\/p>\n\n\n\n
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<\/a>One would expect the local markets and the rand to react negatively to the increased tension between South Africa and the United States.<\/p>\n\n\n\n
South Africa\u2019s economy is tiny in comparison with the United States, which makes it vulnerable to tensions between the two countries.<\/p>\n\n\n\n