{"id":844857,"date":"2025-11-27T16:00:00","date_gmt":"2025-11-27T14:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=844857"},"modified":"2025-11-27T15:56:13","modified_gmt":"2025-11-27T13:56:13","slug":"fresh-disaster-for-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business-opinion\/844857\/fresh-disaster-for-south-africa\/","title":{"rendered":"Fresh disaster for South Africa"},"content":{"rendered":"\n

Relations between South Africa and the United States have hit a deep freeze, with economists warning that the impact will reverberate in the economy for years to come.<\/p>\n\n\n\n

This could prove disastrous for South Africa’s economic turnaround and drive to boost job creation in the country, as the US remains a critical trade partner for multiple sectors.<\/p>\n\n\n\n

South Africa has had an incredibly challenging year dealing with the Trump administration. <\/p>\n\n\n\n

While relations seemed to be warming, and negotiations around trade appeared to be making headway, the past week revealed that diplomatic relations have iced up.<\/p>\n\n\n\n

Over the past month, the White House ramped up its campaigning against South Africa on the international stage, boycotting the G20 meeting hosted in Johannesburg, and repeating false genocide claims against the most industrialised economy in Africa.<\/p>\n\n\n\n

Following the muted handover of the G20 presidency to the US at an unremarkable diplomatic meeting this week, President Donald Trump launched his latest salvo against Pretoria, stating that South Africa would not be invited to the 2026 G20 summit being held in Miami.<\/p>\n\n\n\n

While the diplomatic tiff is happening on the international relations front, trade relations appear to have stalled.<\/p>\n\n\n\n

The latest update from the Department of Trade, Industry and Competition, presented to parliament this week, had no significant updates on negotiations over Trump’s “reciprocal tariffs”.<\/p>\n\n\n\n

The department also only spoke of “hopes” for any renewal of the African Growth and Opportunity Act (AGOA), with the latest update being a new bill tabled in the US Senate that would exclude South Africa’s participation.<\/p>\n\n\n\n

According to Aluma Capital chief economist, Frederick Mitchell, these events all point to a strained “chill” between South Africa and the US that risks hitting the local economy in years to come.<\/p>\n\n\n\n

He said that South Africa is at a critical crossroads, and may have to decide whether to remain in the G20 framework that it is now at risk of being iced out of, or carve out a new path for itself with new trade networks and relationships.<\/strong><\/a><\/p>\n\n\n\n

“The need for diversified partnerships has never been more pronounced, as the country navigates a geopolitical landscape laden with tension and uncertainty,” he said.<\/p>\n\n\n\n

“While the immediate effects of the growing rift may be contained, the spectre of a diminished relationship with the US looms large, demanding that South Africa adapt to both domestic pressures and international perceptions.”<\/p>\n\n\n\n

Mitchell said that the true cost of the breakdown and “diplomatic chill” will only really be seen in the coming months and heading into the new year. <\/p>\n\n\n\n

“The economic implications of this strained relationship are yet to become glaringly visible, likely to emerge within 12 to 24 months as the repercussions cascade through sectors pivotal to employment and growth,” he said.<\/p>\n\n\n\n

“The current landscape may appear stable, but much like the delayed effects of interest rate changes on economic activity, so too will the ramifications of these political decisions reveal themselves in time.”<\/p>\n\n\n\n

South Africa will feel the strain<\/h2>\n\n\n\n
\"\"<\/a>
Aluma Capital Chief Economist, Frederick Mitchell<\/figcaption><\/figure>\n\n\n\n

Underlining the stakes, Mitchell noted that, even though the US has announced a temporary reduction on tariffs for some specific South African imports, the 30% tariff still looms large, unchanged.<\/p>\n\n\n\n

The reduction in tariffs will benefit a handful of agricultural products like oranges and macadamia nuts.<\/p>\n\n\n\n

However, the tariffs still undermine South Africa’s competitiveness, especially against producers from Chile and Peru, who enjoy more favourable conditions, he said.<\/p>\n\n\n\n

Regarding AGOA, the problems become even more compounded.<\/p>\n\n\n\n

AGOA officially lapsed at the end of September 2025, just before the US government went into a 43-day shutdown. <\/p>\n\n\n\n

While the focus was on the growing standoff between republicans and democrats, a bill was quietly tabled in the US Senate looking to extend AGOA by two years<\/strong><\/a>\u2014but without South Africa.<\/p>\n\n\n\n

The bill in question explicitly pulls in a separate Senate bill tabled in September, calling for a full review of bilateral relations between the US and South Africa. That bill explicitly pulls South Africa out of AGOA.<\/p>\n\n\n\n

According to the Chief Economist of the Agricultural Business Chamber of South Africa, Wandile Sihlobo, should this bill be turned into law, farmers would certainly suffer.<\/strong><\/a><\/p>\n\n\n\n

“If South Africa were in a position where the AGOA were not renewed, we would face slightly higher tariffs,” he said.<\/p>\n\n\n\n

“South Africa would likely face around 33% tariffs if we also account for the previous Most Favoured Nations (MFN) tariff rates\u2014before the Liberation Day Tariffs.”<\/p>\n\n\n\n

While Sihloho noted that the rates are not exact, and would differ product by product, it presents an overall picture of directional tariffs being higher than the current 30% being imposed.<\/p>\n\n\n\n

“These higher tariff levels would make access to the US market more challenging for various agricultural products, as competitors such as Chile and Peru face much lower tariff rates of around 10%, making them more price-competitive with South Africa.”<\/p>\n\n\n\n

Despite attempts to generally downplay the impact of the tariffs on South Africa, from an agricultural perspective, the US remains a valuable market, Sihlobo said.<\/p>\n\n\n\n

The US accounts for approximately 4% of South Africa\u2019s total agricultural exports, valued at US$13.7 billion in 2024.<\/p>\n","protected":false},"excerpt":{"rendered":"

Relations between South Africa and the United States have hit a deep freeze, with economists warning that the impact will reverberate in the economy for years to come.<\/p>\n","protected":false},"author":10,"featured_media":833047,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[21743,22000,12501,20932,21374],"class_list":["post-844857","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-opinion","tag-aluma-capital","tag-frederick-mitchell","tag-ramaphosa","tag-trump","tag-wandile-sihlobo"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/844857","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\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=844857"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/844857\/revisions"}],"predecessor-version":[{"id":844872,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/844857\/revisions\/844872"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/833047"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=844857"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=844857"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=844857"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}