President Cyril Ramaphosa says the US decision to impose a 30% tariff on South African imports highlights an urgency for the country to adapt to the increasingly turbulent headwinds in international trade.
South Africa is one of the countries affected as US President Donald Trump's administration steps up efforts to address trade imbalances and promote US economic sovereignty. The new tariff on SA is set to come into effect within seven days after August 1.
In his weekly letter, Ramaphosa acknowledged the effect this would have on industries that rely on the US but noted South Africa is not the only country affected, citing several other countries grappling with these measures.
“The US is South Africa’s second largest trading partner by country and these measures will have a considerable effect on industries that rely heavily on exports to that country and on the workers they employ, as well as on our fiscus,” he said.
“Domestic sectors such as agriculture, automotive and textiles have historically benefited from duty-free access to the US market under the African Growth and Opportunity Act.”
Ramaphosa said South Africa's trade relations historically complemented the US in nature.
“South African exports do not compete with US producers and do not pose a threat to US industry. It remains our aspiration that this should continue. Largely, our exports are inputs into US industries and therefore support the US' industrial base. South Africa is also the biggest investor from the African continent into the US, with 22 of our companies investing in a number of sectors including mining, chemicals, pharmaceuticals and the food chain.”
He said the government has been engaging the US to improve trade and investment relations that would benefit both countries.
“Our priority is protecting our export industries. We will continue to engage the US in an attempt to preserve market access for our products. We must also accelerate the diversification of our export markets, particularly by deepening intra-African trade.”
The government has established an export support desk to assist affected producers. Ramaphosa said the government would soon announce the modalities of support packages for those affected which would also help guide industries looking to expand into markets in Africa, Asia, the Middle East and others.
“Strengthening regional value chains will be key to building resilience for our export markets in the longer-term. Much as strengthening and establishing alternative value chains will take time, this moment presents us with an opportunity to push forward with the implementation and expansion of the African Continental Free Trade Area.
“Reducing over-dependence on certain markets is a strategic imperative to build the resilience of our economy. It will also enable us to expand the frontiers of opportunity for South African businesses, goods and services. In the coming months we will scale up our trade missions into new markets in Africa and beyond, as well as the national exporter development programme whose aim is to grow the pool of export-ready companies.”
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