The impact of the United States’ new 30% tariff on exports, along with a likely exit from the African Growth and Opportunity Act (AGOA) and the potential shakeup of the Government of National Unity, is crushing the country’s prospects for growth.<\/p>\n\n\n\n
This is according to Investec chief economist Annabel Bishop, who said that the events over the past 24 hours may have wiped as much as 0.5 percentage points from GDP growth in 2025.<\/p>\n\n\n\n
It will also drive up inflationary pressure, which will likely impact a host of local conditions, including the prospects for interest rate cuts.<\/p>\n\n\n\n
Bishop noted that US President Donald Trump’s global ‘reciprocal’ tariff announcement represented an escalation of America’s trade war, which pushed up inflation projections, reversed interest rate cut expectations, and generally dampened markets.<\/p>\n\n\n\n
She said the tariffs hit global sentiment hard and fast, with expectations ahead of the announcement already causing economic activity to falter.<\/p>\n\n\n\n
“While the US\u2019s tariff increases are not set in stone, representing instead a ‘starting point’, financial markets have had a markedly negative reaction, and further volatility is likely on adjustments, either up or down, causing uncertainty to persist,” she said.<\/p>\n\n\n\n
The impact has been worse for South Africa, as the resultant volatility exacerbated already strained trading due to its internal political strife.<\/p>\n\n\n\n
Trump has set a ‘discounted’ reciprocal tariff of 30% on South Africa, though many of the country’s key exports are exempt, including gold, coal, platinum and other metals.<\/p>\n\n\n\n
Regardless, South Africa will still be hard-hit by the tariffs, especially the agriculture and automotive sectors.<\/p>\n\n\n\n
Making matters worse, these sectors are likely to suffer even more, with Bishop expecting South Africa to be booted from AGOA benefits.<\/p>\n\n\n\n
AGOA gives South Africa preferential access to the United States\u2014something of an anathema to the Trump administration. <\/p>\n\n\n\n
Even before Trump’s second term as president, South Africa’s including in AGOA was in question. The Act is up for renewal in September 2025, and many economists and analysts expect it to end.<\/p>\n\n\n\n
However, South Africa could be expelled from the Act long before that through an executive order, with some analysts expecting exactly that.<\/p>\n\n\n\n
Ultimately, Bishop said that these events will cut South Africa’s GDP prospects for the year, with Investec now anticipating 1.3% growth in 2025, down from previous estimates at 1.8%.<\/p>\n\n\n\n