The department of trade, industry and competition outlined the dire situation that exports could face if South Africa is taken out of the African Growth and Opportunity Act (Agoa). The department presented trade relations agreements and statuses to the Portfolio Committee in parliament recently.
The department said that while the negotiations are ongoing, the government has put forward a proposal that the tariffs applicable to South Africa should be lower or not more than 10%, the preferential market access for key value-added products should be preserved, and the Agoa preferences should be maintained.
“In the absence of Agoa, South African products will face tariffs in the United States that will make them less competitive,” the report stated.
The department said the wine and citrus industries are the two from the agricultural sector that would be hit hard should the 30% reciprocal tariffs
be levied against South African exports.
Trade negotiations continue
“South Africa has put forward a proposal for a framework agreement, still to be negotiated, that must promote mutually beneficial relations and South Africa’s development needs, and such elements include addressing agricultural market access from both sides and promoting two-way investment in critical sectors.
“Cooperation on digital trade must preserve regional integration and industrial capabilities,” the report stated.
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In the report for the wine industry, the projected cost duties that importers will have to pay amounts to $1.99 million; however, should the 30% tariff hike come in, the industry will have to pay $8.98 million. The wine industry’s exports to the USA for 2024 were worth $ 29.93 million.
Meanwhile, for the citrus industry, their exports to the USA in 2024 were worth $ 55.84 million, with the industry expected to pay $2.23 million on projected costs; however, with a 30% tariff hike, the industry might have to cough up $16.75 million based on 2024 exports.
“The US is a significant market for South Africa’s goods and a key source of investment. The US is South Africa’s second-largest national trading partner, after China.
“South Africa’s goods export basket to the USA, based on the 2023 figures, agriculture contributes 7%,” the report stated.
Tariff uncertainty dire for economic growth
Minister of trade, industry and competition, Parks Tau, said the tariffs proposed by the USA are creating a lot of uncertainties and a lack of economic growth not only in South Africa but globally.
“All of us should acknowledge that up until we get to the 9th July, there is no certainty to the direction that will be taken; the impact of this will be huge,” he said.
According to the department, the importance of the US market both as a source of investment and a destination for exports is clear, and the SA government will continue to advocate for a “reset” of trade relations with its long-standing trade partner to create policy certainty for exporters in particular.
“SA has been putting more emphasis on enhancing trade with Africa. Its exports to Africa increased to R568 billion in 2024, from R545 billion in 2023, while imports rose to R190 billion, from R166 billion in the same period, resulting in a trade surplus of R378 billion for the calendar year.
“South African exports to the continent were largely driven by products from agriculture, which soared by 40.5%,” the report stated.
On South Africa’s G20 presidency, the department said some of the key issues that will be under discussion include climate change, food security, value chains to promote sustainable development, among others.
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