Economists have raised concern that Donald Trump’s return to the White House in January could have negative consequences for the South African economy.
The economists are mainly worried about Trump’s plan to impose import tariffs and the possibility SA may be kicked out of the African Growth and Opportunity Act (Agoa).
Enacted in 2000, Agoa allows eligible sub-Saharan African countries duty-free access to the US market for over 1,800 products.
Agoa is one stick that could hurt South Africa
According to Wesgro, South Africa was the largest sub-Saharan utiliser of Agoa in 2021, with Western Cape at the top as five of the country’s top 10 exports came almost exclusively from that province. These included citrus, engine parts, wine, prepared/preserved fruit and nuts, fruit juices, fish, grapes and dried fruit.
Trump, who was elected US president this week, has stated that he may consider imposing import tariffs across the board and in particular on China – with a proposed 20% up to 100% tariff on Chinese electric vehicles.
Independent economist Mandla Maleka says though the SA economy was considered a small and open economy, tariffs on Chinese imports into the US, could negatively impact emerging markets.
“Tariffs could render SA imports less competitive or downright uncompetitive and therefore put the more than 1 800 goods we export to the US, at risk. These include a variety of minerals worth over $2-billion, vehicle exports worth over $1-billion, aluminium, iron and steel.
“These and allied export industries could feel it on employment. Although China could have easily been a substitute partner for South Africa, it could face a rather aggressive 100% tariffs [barrier].”
Tariffs would delay economic recovery
He said any imposition of tariffs was almost certain to impact the rand negatively. This could see the Reserve Bank extending flat interest rate decisions, which could keep borrowing costs expensively high for longer.
“The results could be sluggish recovery of the economy and heightened unemployment,” warned Maleka.
He said the US foreign ministry has lately been viewing SA as a misaligned partner in global politics on Ukraine and Israel, thus Trump might take the opportunity to eject SA from Agoa.
“But if anything, SA authorities need to be vigilant prior to Trump’s inauguration in January,” he said.
Not all doom and gloom
South African Chamber of Commerce and Industry chief executive Allen Mukoki was more optimistic, telling Sunday World that Trump’s fight with China and Europe has always been about the US gaining market access and paying lower prices for goods and services.
“We think that it is going to be business as usual. SA is a non-aligned country. We need to get ready to do more with the US, Trump is a businessman who wants to drive an aggressive growth of American business. Trump has promised that he is going to end the war between Russia and Ukraine. This means South African business must get ready to play a role in rebuilding Ukraine’s infrastructure by supplying mineral resources like iron, steel and manganese for the next 10 years,” said Mukoki.
Economist Duma Gqubule echoed Maleka’s sentiments, saying he believes that the Trump era would be bad for the South African economy.
