The US Supreme Court ruling that President Donald Trump’s signature tariffs are illegal offers some relief for South African exporters, but the respite may prove short-lived, experts said on Sunday.
On Friday, the US Supreme Court ruled 6-3 that Trump had exceeded his authority in using the 1977 International Emergency Powers Act to impose sweeping global tariffs and declared the levies illegal. That meant an immediate end to the punitive 30% tariff he had imposed on some South African imports.
However, Trump immediately imposed a new 10% tariff using different legislation — section 122 of the 1974 Trade Act — which he then increased to 15% on Saturday, arguing once more that these levies were needed to address trade deficits. The new tariffs are only guaranteed to be in place for 150 days, as Congress will have to vote in support of their continuation.
Trump’s tariffs are a key aspect of his economic policy, which he regards as a means to encourage businesses to invest in manufacturing in the US.
But Trump is not assured of congressional support to continue with his aggressive levies, as Republicans fear growing consumer unhappiness at the rising cost of living may cost them votes in the upcoming midterm elections.
The US is South Africa’s third biggest trading partner, after the EU and China, and accounts for 7.5% of its global exports, according to the department of trade, industry & competition. About a third of South Africa’s exports to the US are exempted from tariffs.
NWU Business School economist Raymond Parsons said the US Supreme Court’s decision is a recipe for more confusion and uncertainty.
“The net effect of the latest changes in US tariff levels needs to be urgently clarified by countries such as South Africa, which does important business with the US. President Trump is still determined to rebuild US tariff walls, and the threat of new tariffs remains real,” he said.
Trump’s sector-specific tariffs, such as those on the steel and motor industries, were excluded from the Supreme Court’s decision, as they were imposed under different legislation, he said. And some products — such as citrus, macadamia nuts and critical minerals — have been exempted from tariffs altogether.
The net effect of the latest changes in US tariff levels needs to be urgently clarified by countries such as South Africa, which does important business with the US.
— Raymond Parsons, NWU Business School economist
The latest US tariff developments underscored how important it is for South African companies to diversify their export markets, said Trade & Industrial Policy Strategies senior researcher Neva Magketla.
While the US Supreme Court ruling is good news, the long-term outcome is unclear since Trump is intent on circumventing it, she said.
On Saturday Trump said in social media posts that he intends to devise other “legally permissible” tariffs, using legislation that allows import duties to be imposed on products or nations following investigations into national security or unfair trade practices.
Those investigations are likely to take several months but could well lead to the introduction of new levies, said Magketla.
XA Global Trade Advisors CEO Donald MacKay said the new 15% global tariff is good news for South Africa as it levels the playing field, stripping away the competitive advantage previously enjoyed by countries that had struck deals with the Trump administration in exchange for lower levies.
Chile, for example, has only faced 10% import tariffs on its goods, he said. The new tariff is thus good news for wine exporters competing with Chilean products.
MacKay said that benefit will be amplified by South Africa’s continued participation in the African Growth and Opportunity Act (Agoa), which gives participating African countries preferential access to US markets.
About a quarter of South Africa’s total exports to the US fall under Agoa, through which it exported products worth $3.6bn to the US in 2023.
Business Day
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