South Africa faced a new reality this week – hostility from US President Donald Trump turned into an executive order halting all US foreign aid and assistance, and offering refuge to South Africa’s supposedly beleaguered Afrikaner farmers.
In addition, the week started with President Trump imposing new 25% tariffs on all steel and aluminium imports into the US “without exception”.
How this will affect South Africa’s trade with the US remains to be seen, but businesses fear the loss of South Africa’s duty-free access to US markets when the AGOA legislation – an act of the US congress – comes up for renewal later this year.
The Daily Maverick reports that with R4 billion in AGOA preferential exports at risk, and a total of R20 billion in trade to the US “the fallout could devastate the key automotive and agricultural industries”.
Those threats lie in the future, as AGOA comes up for renewal in September. However, the Daily Maverick highlighted an immediate harmful impact of the US financial sanctions – the freeze on US-backed credit guarantees and development financing.
“South Africa has historically relied on the World Bank and IMF to secure credit guarantees, funding packages and investment programmes. As of 2023, the country had received nearly $2 billion in World Bank-backed development loans, largely focused on energy infrastructure and economic development projects.
“The immediate suspension of new credit guarantees means South Africa will now face higher borrowing costs, with lenders pricing in additional risk,” the article said.
“South Africa is at a crossroads. The fallout from US sanctions could either force a realignment of South Africa’s economic strategy towards self-reliance and alternative alliances, or it could push the government into making difficult concessions to Washington.
“Whether diplomatic efforts succeed or not, the impact on industries such as automotive manufacturing, agriculture, and financial markets will be immediate and profound. How the government navigates this crisis in the coming months will determine whether the sanction is a short-term disruption or a long-term economic shift.”
A great trek to Texas? Not yet
The first reason that President Trump cited for his financial sanctions was what he described as South Africa’s “race-based discrimination” against white Afrikaner famers, including “racially discriminatory property confiscation”.
He undertook to resettle those farmers, including in the US.
He said South Africa’s 2024 Expropriation Act “follows countless government policies designed to dismantle equal opportunity in employment, education, and business, and hateful rhetoric and government actions fuelling disproportionate violence against racially disfavoured landowners”.
The farmer issue was followed by what President Trump said were South Africa’s “egregious actions” that undermined US foreign policy, such as support for Hamas and Iran, and the genocide case that South Africa has brought against Israel at the World Court in the Hague.
The executive order required US departments to “prioritise humanitarian relief, include admission and resettlement” of “Afrikaner refugees” in the US.
Is there going to be a rush by South African farmers to take up this offer? Unlikely, said the Sunday Times as most farmers wanted to stay in South Africa.
It reported that two Afrikaans organisations, Solidariteit and Afriforum, would be leading a delegation to the US to “put the situation in South Africa in context”, including what they viewed as discriminatory actions by the government. They had not asked for financial sanctions and did not want South Africa’s AGOA benefits to be cut.
However, the However, the Free State farmers’ association Free State Agriculture welcomed Trump’s intervention, as did the Afrikaner Bond. And Business Techreported that 10 000 white farmers were looking to exit South Africa.
It reported that Neil Diamond, president of the SA Chamber of Commerce in the USA had said that “over 10 000 inquiries had been received from South Africans seeking information on refugee status and relocation to the US”. Biznews later quoted Diamond saying the number of inquiries had increased to 17 000.
