World trade is going to be complicated in 2025, because US President-elect Trump sees tariffs not as a trade measure but as a stick to make other countries do what he wants.
The targets of Trump’s ire, unfortunately, could include South Africa.
Trump will become United States president on 20 January next year. He has threatened to impose new tariffs “on day one” on China, Mexico and Canada for reasons that have nothing to do with trade.
Mexico and Canada face a 25% tariff on all exports to the US unless they crack down on illegal immigration. China could see a 10% tariff, on top of other tariffs Trump is proposing, unless it acts against fentanyl smuggling.
Apart from the ramifications of disruptions to world trade, South Africa is directly involved on two issues.
The first is the AGOA trade deal – US legislation granting African countries duty-free access to the US market from which South Africa has benefited since 2000. AGOA is up for renewal in 2025, and the sting is a proviso that qualifying countries must not be seen to act against US interests.
US lawmakers, both Republicans and Democrats, have threatened action against South Africa because of its perceived bias towards Russia, China and Iran. Trump will agree – expect AGOA exclusion or demands for concessions.
The second issue is Trump’s threat to impose 100% tariffs on all BRICS countries – of which South Africa is a member – if the BRICS group follows through on plans to establish an alternative currency to “replace the mighty dollar”.
That’s a threat of 100% tariffs on nine countries and some major economies – Brazil, Russia, India, China, South Africa and this year’s additions of Iran, the United Arab Emirates, Ethiopia and Egypt.
That may not happen – the BRICS currency idea is nowhere near a final proposal, and South Africa has denied that it is being planned at all. But all nine countries, and the rest of the world, know that Trump sees tariffs as a political bludgeon.
Johann Rupert, whose worldwide business empire has made him South Africa’s richest man, clearly believes the threat to South Africa’s AGOA benefits is real.
“Our automobile industry, our farmers, our exports — we will have a serious blow to the economy if we lose AGOA,” Biznews reported Rupert telling a forum in Stellenbosch last week.
“I will try to use whatever little influence I have to try and keep AGOA intact.”
Agricultural economist Wandile Sihlobo sees market diversification and increased agricultural exports as the best way the sector can counter Trump’s trade disruptions.
While Trump’s tariffs, and retaliation by China, could cause volatility in global oilseeds and grain prices, Sihlobo believes the direct impact on South Africa’s farming community could be minimal.
“Beyond the US, the trade fragmentation further solidifies the view we have previously shared that South Africa must work to diversify its agricultural export markets. In a fragmented world like today, an export-oriented sector should spend more time and resources on broadening export markets and diversifying the risk.
“South Africa’s agriculture growth hinges on the country’s success in creating as many export markets as possible. In addition to retaining the existing export markets, BRICS remain one such avenue,” Sihlobo wrote.
