As United States President Donald Trump imposed a 30% tariff on South Africa and other nations, Agbiz senior agricultural economist Wandile Sihlobo said the uncertainty will linger for businesses until there is clarity about product-specific tariffs.
Sihlobo said the United States (US) authorities have yet to communicate the path forward for the African Growth and Opportunity Act (Agoa), which might lead to more frustration in the coming weeks.
“From a domestic policy response, we remain convinced that South Africa should seek a free trade agreement with the US when the dust settles. A reliable, long-standing trade arrangement would serve the South African industries well.
“We also believe the retaliation approach may not be ideal. The best approach would still be to seek better relations with the US and attempt to understand their misgivings about South Africa’s trade matters that landed the country on the current path of higher tariffs,” he said.
Seeking solutions and Middle East opportunities
Sihlobo said they also believe the 60% tariffs the US authorities argue South Africa imposes on the world are not based on sound trade calculations.
“Indeed, some products face higher tariffs in the South African market, but there are rebates through the International Administration Commission of South Africa (ITAC) to assist any country that requires relief.
“South Africa is arguably amongst the countries with the lowest tariffs, which some local stakeholders have previously argued was a policy mistake at the onset of South Africa rejoining the global economy after 1994, following years of isolation,” he said.
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Given SA’s peripheral participation and the possibility of increasing the country’s agricultural production in the coming years, Sihlobo added, there is room for greater participation in the Middle East market.
“While a big share of SA’s agricultural products are already exported to the Middle East, the presence of SA agriculture in this region is arguably still peripheral,” he said.
Tariffs will hurt SA trade
Meanwhile, the presidency said in a statement that the tariffs affirmed the urgency to negotiate a new bilateral and mutually beneficial trade agreement with the US as an essential step to secure long-term trade certainty.
“Whilst South Africa remains committed to a mutually beneficial trade relationship with the United States, unilaterally imposed and punitive tariffs are a concern and serve as a barrier to trade and shared prosperity,” the presidency stated.
Xolelwa Mlumbi-Peter, the deputy director-general for trade of the department of trade, industry and competition (DTIC), said the tariffs are not clear on how the US came to the conclusion of the percentages.
“It is unclear how they came to that number; the average tariff in South Africa is 7.6%, so through consultation we will probably get a better sense of how they came up to this,” she said.
Mlumbi-Peter said the tariffs will have a significant impact on South Africa, including the motor industries.
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