While the country will definitely feel the short-term impact of a 30% tariff on its exports\u2014which has been in effect since 7 August\u2014the direct impact on the economy will be relatively small.<\/p>\n\n\n\n
This is a view that has been echoed by many economists who have crunched the numbers.<\/p>\n\n\n\n
Most estimates put the direct economic impact on South Africa at around a third of a percentage point to GDP, which is marginal compared to some of the other knocks the country has suffered\u2014such as load shedding and collapsing freight and logistics networks.<\/p>\n\n\n\n
Like many others, Theobald expects the short-term impact to be felt across affected industries, like the automotive and agricultural sectors.<\/p>\n\n\n\n
While in no way downplaying the severity and harm done by the tariff hit, Theobald said there is \u201cgreat uncertainty\u201d around how permanent this will be.<\/p>\n\n\n\n
With many moving parts, including government intervention, continued negotiation, pivots to other markets and unpredictable shifts in the United States itself, anything could happen.<\/p>\n\n\n\n
The one aspect that can\u2019t be ignored, however, is how the global economy is being and will continue to be hit.<\/p>\n\n\n\n
Theobald noted that, in totality, Trump\u2019s tariff war has increased the average US tariff rate to 18.3%, up from the 2.5% average that it was before.<\/p>\n\n\n\n
\u201cThat will deal a major economic shock to the world,\u201d he said, as tariffs suddenly jump to the highest level since 1934\u2014the middle of the Great Depression.<\/p>\n\n\n\n
This has restructured global trade almost in its entirety, and it won\u2019t be without consequences.<\/p>\n\n\n\n
Global growth is already slowing<\/h2>\n\n\n\n![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2023\/07\/Stuart-Theobald-1024x683.png\")
<\/a>Krutham Executive Chairman, Stuart Theobald<\/figcaption><\/figure>\n\n\n\nThe consequences are already being felt.<\/p>\n\n\n\n
The International Monetary Fund’s July update to its World Economic Outlook report reflected a highly volatile period for global growth.<\/p>\n\n\n\n
It represented a period of “breathing room” for world economies as they negotiated with the Trump administration over tariffs, and reflected a slight easing of the waves of panic that fed through markets in April.<\/p>\n\n\n\n
According to the IMF, its forecast for global GDP output in 2025 lifted to around 3% in July, up from the 2.8% forecast back in April.<\/p>\n\n\n\n
However, the international financier pointed out that these projections were still below the forecasts of 3.3% growth made at the end of 2024.<\/p>\n\n\n\n
This reflects not only the reality of the uncertainties that persist in the market but also a fundamental downward shift in the reality of the tariffs in the market.<\/p>\n\n\n\n
Following the July outlook, the Trump administration moved ahead with tariffs between 10% and upwards of 50% on many of the United States’ key trade partners, cementing the shift.<\/p>\n\n\n\n
Theobald said that if global economic growth takes a serious hit as a result, “that would have second-order effects on South Africa’s economy as global demand slumps”.<\/p>\n\n\n\n
“The size of that impact is difficult to anticipate, but it could be even bigger than the direct effect of the tariffs on South Africa’s output.”<\/p>\n\n\n\n
For South Africa, GDP growth is, at best, expected to hit 1% in 2025, and more than likely to land around 0.7% or 0.8% due to the direct impact of the tariffs.<\/p>\n\n\n\n
<\/a>The consequences are already being felt.<\/p>\n\n\n\n
The International Monetary Fund’s July update to its World Economic Outlook report reflected a highly volatile period for global growth.<\/p>\n\n\n\n
It represented a period of “breathing room” for world economies as they negotiated with the Trump administration over tariffs, and reflected a slight easing of the waves of panic that fed through markets in April.<\/p>\n\n\n\n
According to the IMF, its forecast for global GDP output in 2025 lifted to around 3% in July, up from the 2.8% forecast back in April.<\/p>\n\n\n\n
However, the international financier pointed out that these projections were still below the forecasts of 3.3% growth made at the end of 2024.<\/p>\n\n\n\n
This reflects not only the reality of the uncertainties that persist in the market but also a fundamental downward shift in the reality of the tariffs in the market.<\/p>\n\n\n\n
Following the July outlook, the Trump administration moved ahead with tariffs between 10% and upwards of 50% on many of the United States’ key trade partners, cementing the shift.<\/p>\n\n\n\n
Theobald said that if global economic growth takes a serious hit as a result, “that would have second-order effects on South Africa’s economy as global demand slumps”.<\/p>\n\n\n\n
“The size of that impact is difficult to anticipate, but it could be even bigger than the direct effect of the tariffs on South Africa’s output.”<\/p>\n\n\n\n
For South Africa, GDP growth is, at best, expected to hit 1% in 2025, and more than likely to land around 0.7% or 0.8% due to the direct impact of the tariffs.<\/p>\n\n\n\n