Trump's 'liberation Day' Tariffs A Major Threat To Sa

The potential loss of South Africa's preferential access to the US market under the African Growth and Opportunity Act Agoa due to proposed Liberation Day tariffs by US President Donald Trump, has sparked widespread concern among industry leaders.

The citrus and automotive sectors, two of the nation's key export industries, face severe economic repercussions should the tariffs to be announced on April 2 be implemented.

Former CEO of the Citrus Growers Association of Southern Africa, Justin Chadwick, underscored the importance of preferential access to the US in keeping the industry afloat.

'Agoa keeps our citrus tariff-free, allowing us to compete with Southern hemisphere rivals such as Peru and Chile. If removed, we risk losing thousands of rural jobs and over a billion rand in export revenue.'

The Democratic Alliance's Noko Masipa reinforced these concerns, pointing out that 99 of South Africas citrus exports to the US entered duty-free under Agoa, supporting thousands of jobs from farms to ports.

The automotive industry, another major contributor to South Africas economy, could suffer significantly if Agoa benefits were revoked.

Billy Tom, president of the Automotive Business Council Naamsa, said scrapping Agoa would be devastating for the local economy.

Exports to the US from South Africa increased 498 from the inception of Agoa in 2001 to 2023.

He stressed that the US was our third-largest export destination with auto exports amounting to R24.1bn in 2023.

DA leader, John Steenhuisen, warned that South Africas removal from Agoa could result in the loss of 112 000 jobs in the automotive sector, with R435 billion in automotive trade at risk.

According to Naamsa, Agoa has played a crucial role in job creation, supporting approximately 85 000 direct jobs and 426 000 indirect jobs, amounting to a total of around 511 000 jobs in South Africa.

The loss of Agoa benefits could spell disaster for these workers and the wider economy.

But the US under Trump and one of his principal advisers, Elon Musk, believes it has legitimate concerns over South Africas trade policies, citing laws such as the Expropriation Act and broad-based Black Economic Empowerment legislation.

Washington has, on more than one occasion, stated that these were obstacles to investment.

Trump and Musk argue that these policies create an unfair environment for American businesses.

US Trade Representative Jamieson Greer has said: 'No American President in modern history has recognised the wide-ranging and harmful foreign trade barriers American exporters face more than President Trump.'

Among the contentious issues are the Public Procurement Act, which prioritises contracts for local small, medium, and micro enterprises SMMEs and historically disadvantaged individuals, making it more difficult for US companies to secure government tenders.

US data shows that total goods trade between the two nations stood at 20.5 billion in 2024. However, American exports to South Africa declined by 18.3 to 5.8 billion, while imports from South Africa increased by 4.9 to 14.7 billion, widening the US trade deficit to 8.8 billion a 29 increase from the previous year.

The Expropriation Act, signed into law by President Cyril Ramaphosa in January, has also been cited as a deterrent to foreign investment. While it permits expropriation without compensation in specific cases, an analysis by Standard Bank determined that it did not violate private property rights or authorize widespread land seizures.

With escalating tensions over trade policies, South Africa faces mounting pressure from the US, potentially jeopardising future economic cooperation.

The potential loss of Agoa privileges poses a severe threat to the countrys economy, particularly in the citrus and automotive industries. Industry leaders warn that removing Agoa benefits could lead to mass job losses and economic instability.

As the stakes continue to rise, South Africa must navigate these challenges through diplomatic engagement to protect its trade interests and safeguard its workforce.