{"id":819441,"date":"2025-04-03T11:30:48","date_gmt":"2025-04-03T09:30:48","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=819441"},"modified":"2025-04-03T11:30:55","modified_gmt":"2025-04-03T09:30:55","slug":"trumps-new-tax-on-south-africa-makes-no-sense","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/government\/819441\/trumps-new-tax-on-south-africa-makes-no-sense\/","title":{"rendered":"Trump’s new tax on South Africa makes no sense"},"content":{"rendered":"\n

US President Donald Trump announced a new 30% tariff on South African goods entering the world’s largest economy, but the computation used to arrive at the 30% figure is deeply flawed.<\/p>\n\n\n\n

This is because they are not based on actual tariff policies of the countries affected but rather on the US trade balance.<\/p>\n\n\n\n

In his ‘Liberation Day’ speech on Wednesday, 02 April, Trump announced a 10% global tariff on all imports to the United States. <\/p>\n\n\n\n

However, South Africa was on a list of the world’s ‘worst offenders’ when it comes to trade deficits with the US, warranting a higher rate.<\/p>\n\n\n\n

The USA has run a trade deficit for several years, something Trump and his team aim to rectify via a series of “reciprocal” tariffs. <\/p>\n\n\n\n

During his briefing, the US leader revealed a chart showing that new tariffs will be imposed on a long list of countries, including South Africa, China, the EU, India and South Korea.<\/p>\n\n\n\n

These countries would be subject to tariffs higher than the 10% minimum, based on the deficit. Though it would also be discounted by 50%, he said.<\/p>\n\n\n\n

For instance, Trump said that while China imposes tariffs of “67%” on the US, the US would charge a “discounted” rate of only 34% on Chinese goods.<\/p>\n\n\n\n

Trump claimed that South Africa’s tariffs on the United States amounted to 60%. This would work out to a “discounted” 30% tariff on the country.<\/p>\n\n\n\n

This has left analysts scratching their heads, trying to determine how the administration reached these numbers.<\/p>\n\n\n\n

Tariff computation is not based on tariffs<\/h2>\n\n\n
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Following Trump’s announcement, many have been confused about how the USA calculated the tariffs on US goods.<\/p>\n\n\n\n

A tariff is a duty or tax imposed by a country or customs territory on imported goods. Governments often use tariffs to protect industries within a country or as a bargaining tool.<\/p>\n\n\n\n

South Africa’s tariffs on imported goods vary. Apparel items attract a 40% tariff, while there is a 25% tariff on light vehicles and a 20% tariff on original equipment components.<\/p>\n\n\n\n

Trump’s calculation of 60% tariffs thus seems high for South Africa. <\/p>\n\n\n\n

The tariffs for other countries also seemed incredibly high, with China’s tariffs on the USA falling far short of the 67% noted by Trump.<\/p>\n\n\n\n

The White House has since detailed how the reciprocal tariffs are calculated. <\/p>\n\n\n\n

Notably, the formula does not relate to the actual tariffs charged by the trading partner but rather to the US’s trade with it. <\/strong><\/p>\n\n\n\n

“Reciprocal tariffs are calculated as the tariff rate necessary to balance bilateral trade deficits between the US and each of our trading partners,” the White House said.<\/p>\n\n\n\n

“This calculation assumes that persistent trade deficits are due to a combination of tariff and non-tariff factors that prevent trade from balancing. Tariffs work through direct reductions of imports.” <\/p>\n\n\n\n

“The reciprocal tariff rates range from 0 percent to 99 percent, with unweighted and import-weighted averages of 20 percent and 41 percent.”<\/p>\n\n\n\n

The formula that the US government used appears complicated at first, but breaking it down shows that the reciprocal tariff figures are quite easy to identify.<\/p>\n\n\n\n

It used the following formula:<\/p>\n\n\n

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Source: The Office of the United States President<\/figcaption><\/figure><\/div>\n\n\n