South Africa risking R138 billion and thousands of jobs
Ongoing tensions between South Africa and the United States threaten R138.8 billion worth of local exports and thousands of jobs.
Despite this potential impact, exports to the United States make up less than 8% of South Africa’s total exports as the importance of China and other Asian economies has grown.
Concerns regarding South Africa’s exports to the United States, particularly automotive exports, have emerged in 2025 amid increased tension between the two countries and US President Donald Trump’s wide-ranging tariffs.
While many expected greater uncertainty and significant tariffs on imports into the United States, very few predicted the singling out of South Africa.
Relations between South Africa and the US have been battered in the past few months, with Trump criticising South Africa’s genocide case against Israel at the International Court of Justice and making claims of land seizure at the expense of white farmers.
South Africa has tried to reset relations with the US by increasing its diplomatic presence in Washington and sending a delegation of business leaders to New York.
The Department of Trade, Industry and Competition (DTIC) has also prepared a bilateral trade agreement as a backstop in case South Africa gets booted from the African Growth and Opportunity Act (AGOA).
Trade Minister Parks Tau is not confident that South Africa will retain duty-free access to the US market when talks are held later this year.
Since then, Trump has announced a 90-day pause on higher reciprocal tariffs imposed on various countries, including South Africa, while retaining a 10% increase to import tariffs across the board.
Stanlib’s chief economist, Kevin Lings, said this gives South Africa a limited window in which to negotiate with Trump to ensure the country’s exports remain competitive.
Lings explained that despite China’s growing importance as a destination for South African exports, the United States remains a vital trading partner.
Crucially, South Africa has a trade surplus with the United States, which gives the country vital access to foreign exchange.
Trade with the United States makes up close to 8% of South Africa’s total exports, equating to around R138.8 billion worth. This can be seen in the graph below.
AGOA, going, gone
Even if South Africa’s negotiations with Trump over the next 90 days are successful, the country will likely lose its AGOA membership.
To some extent, this has little to do with South Africa antagonising the United States but simply because AGOA has become less relevant over time.
Originally devised to help African states develop their economies by giving them access to the United States market, South Africa no longer fits the bill.
The loss of AGOA would be significant but perhaps would not have as much impact as many fear, given its limited scope and South Africa’s diversified export markets.
“The policy had become far less relevant in the last decade than it was when it began,” Old Mutual’s head of equity research, Meryl Pick, explained.
When AGOA was first launched, the United States was South Africa’s largest trading partner. China has since replaced it.
The loss of AGOA would only affect around 0.1% of South Africa’s GDP, as less than 10% of the country’s exports fall under the agreement.
Pick explained that most South Africa’s exports to the US are commodity-based and, thus, they do not benefit from AGOA.
Despite the limited effect, specific sectors employing hundreds of thousands of South Africans could be severely impacted.
“In a specific South African context, the motor industry is the biggest beneficiary of the program,” Pick said. Another primary sector impacted would be citrus exports.
“So, very big impact in specific industries, for example, in the motor industry and citrus exports, but at a broader GDP level, the effect should be minimal.”
What is more concerning for Pick and Old Mutual is the knock to confidence the loss of AGOA would be for investors and businesses in South Africa.
“It is very bad for sentiment, we would say. For us to be excluded from this is being kicked out of a club that has the tacit support of the United States.”
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