Anger mounts as Trump's tariffs set to bite

IOL News

12 hours ago

Demonstrators burn a US flag and a picture of US President Donald Trump during a protest in defence of national sovereignty following the US government trade taxes and sanctions on Brazil, near the US consulate, in Sao Paulo, Brazil, on August 1, 2025.
Thabo Makwakwa
Analysts warn that the path ahead is fraught with challenges, including potential irreversible damage to sectors already under pressure following the recent imposition of a 30% tariff by the United States on key South African exports.
They raised concerns about long-term economic stability, job security, and export revenue.
Effective August 1, 2025, the new tariffs target key industries, including citrus, macadamia nuts, automotive components, steel, and aluminum.
South Africa's citrus industry, which supports over 35,000 jobs and contributes more than R38 billion annually, faces disproportionate risk.
Speaking to Sunday Independent on Friday, Dr. Iraj Abedian, Chief Economist at Pan-African Investments Research Services, highlighted the severity of the situation.
"The tariffs will have a dire impact on our automotive and citrus industries. We're looking at an initial loss of around 100,000 jobs, especially in motor manufacturing, which feeds into a broader supply chain of tire, component, and leather producers."
Abedian further explained that the Western Cape's citrus sector is uniquely vulnerable due to its climatic resilience against certain citrus diseases like black spot, which restricts exports to the US.
Other regions lacking this advantage could see prices plummet, affecting the entire supply chain.
"When the Western Cape exports are constrained, it affects prices and volumes in other markets like the Middle East, Europe, China, and Russia, creating a ripple effect across the industry."
Beyond immediate impacts, industry experts warn of potentially permanent damage. Wandile Sihlobo, Chief Economist, emphasized that the tariffs threaten the fabric of South Africa's manufacturing sector, particularly those producing vehicles tailored for the US market.
"When factories close due to these tariffs, they don't reopen easily, even years later. The investment required to establish a foothold in the US market is extensive, and once lost, it's nearly impossible to regain."
He pointed out that industries such as automotive manufacturing, which produce both right- and left-hand drive vehicles for export, face the risk of shuttering facilities entirely.
The consequences extend beyond jobs, impacting revenue streams and the country's long-term industrial capacity.
Sihlobo also highlighted the broader implications for South Africa's trade relations.
The US's move increases the vulnerability of South African agricultural exports, such as ostrich products, table grapes, nuts, and wines, to competitors from nations like Peru and Chile, which face lower tariffs.
"South Africa now faces a significant disadvantage, as our exports are taxed at around 30%, while Peru and Chile enjoy tariffs closer to 10%. This disparity undermines our competitiveness."
He noted ongoing negotiations between South Africa and US officials, with the government actively seeking more favorable terms.
However, Sihlobo cautioned that such talks are complex and protracted, especially given the US's recent trade tensions with other major partners like the European Union and Japan.
"The negotiations are challenging, and the current environment of global uncertainty makes it difficult to predict outcomes. Still, we continue to support our government's efforts to advocate for our industries," he said.
With the US accounting for approximately 8% of South Africa's total exports, particularly in vehicles (17%) and agriculture (5%), the impact of these tariffs could be profound.
Higher costs for US buyers are expected to reduce demand, threaten supply chains, and diminish South Africa's export earnings.
Economic analysts warn that the tariffs could accelerate job losses, depress public revenues, and deepen existing economic vulnerabilities.
"This is not just a short-term setback. The damage could be long-lasting, and reversing it will require years of concerted effort and strategic investment, said Abedien.
The experts warned that South Africa's industries must brace for a challenging period ahead.
The Federation of Unions of South Africa (Fedusa) said that while it did not subscribe to alarmist projections of a 'jobs bloodbath,' it was mindful that implementing such measures could profoundly impact South Africa's export-led industries, particularly the automotive sector.
'The proposed tariff would render South African automotive and manufactured goods significantly more expensive and less competitive in a vital export market.
'A contraction in demand would almost certainly force firms to scale down production, with downstream effects that include shift reductions, deferred investments, and potential job losses over time,' Fedusa said.
The president of the General Industries Workers Union of South Africa, Mametlwe Sebei, said the country risks losing access to the US market due to unmet requirements influenced by shifting global politics and policies.
'When you look at AGOA, the US Congress has specific requirements for Africa, and many US Congress members have pointed out that South Africa is not meeting these. This has been an ongoing issue, even in the past.
'Secondly, given policies on Israel-Palestine, and the current focus on China and Russia as a bloc, the global economy is shifting, and it's unlikely that South Africa will maintain the privileged access it currently enjoys to the US market,' said Sebei.
He argued that if South Africa wants to transition toward manufacturing vehicles, it must mobilize resources and industry capacity to meet the country's transport and manufacturing needs.
However, he expressed skepticism about current ambitions and the capacity to achieve these goals.
Meanwhile, President Cyril Ramaphosa has announced that negotiations with the United States will continue over the next week.
Ramaphosa said that ongoing communications between South Africa and US officials continued on Friday, adding that the government has submitted a Framework Deal to enhance mutually beneficial trade and investment relations.
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