Yesterday, Donald Trump essentially threatened to end AGOA by other means, as he proposed imposing a 30% tariff on South African exports. He says this move is aimed at closing the trade deficit between the two nations and serves as a form of reciprocity for the high tariffs South Africa imposes on U.S. goods.
In addition, South Africa could face another 10% tariff as a BRICS member if Trump follows through on his threat to penalize goods from nations aligned to BRICS.
This essentially signals the potential death of AGOA and puts a major spanner in the works of South Africaโs Industrial Action Plan, which is underpinned by the automotive industry that contributes about 33% of the countryโs value addition.
With huge investments having gone into upgrading South Africaโs automotive factories, and falling sales of South African manufactured brands like BMW and Mercedes internationally due to competition from Chinese brands, the economic outlook for the industry is looking bleak, as much of its automotive exports go to U.S. market.
The same tariffs would also impact South Africaโs long standing fruit exporters who are among worldโs top ten fruit exporters in the world.
Trump, however, has offered a concession saying if South Africa reduces tariffs on U.S. imports, he may lower tariffs on South African goods. The problem with that is U.S. goods already enjoy prohibited government subsidies. As such, they enjoy unfair advantages that the WTO and Tokyo Round Subsidy Codes discourage developing countries from emulating.
By citing reciprocity to justify higher tariffs as retaliation for South Africaโs protective tariffs, the U.S. is attempting to sidestep violating GATT rules against using tariffs as a weapon in trade competition.
This situation could work in South Africaโs favorโif it publishes a white paper exploring how the U.S. subsidizes its automotive, industrial, technology, and agriculture sectors in ways that create unfair and potentially destructive competition for their goods in South African markets.
Itโs a well-known fact that such U.S. subsidiesโparticularly in agricultureโhave destroyed rice farming in Haiti, cotton farming in Burkina Faso and even Zimbabwe. In response to similar injustices, Brazil took the U.S. to the World Trade Organization in 2001 and won a 2010 settlement: for every subsidy given to U.S. cotton farmers, the U.S. was required to provide equivalent subsidies to Brazilian farmers.
South Africa could similarly have a strong WTO caseโarguing that any subsidies the U.S. gives its farmers on goods exported to South Africa, combined with the lower tariffs that the U.S. is demanding, would grant the U.S. unfair advantages that violate international trade rules.
Ultimately, it is clear that the U.S. is likely to close its markets to South Africa by weaponizing tariffsโamplified by subsidiesโclearly create unfair competition. In many ways, this resembles coercive economic measures against South Africa.
With two bills now in the U.S. Congress aimed at imposing sanctions on South Africaโthe U.S.โSouth Africa Bilateral Relations Review Act and the recently introduced Addressing Hostile and Antisemitic Conduct by the Republic of South Africa Act of 2025โit appears that South Africa may face further coercive measures in the medium term.
The Republic must act swiftly to mitigate these looming economic challenges.
Part of the solution could lie in South Africa seeking alternative markets in Asia and leveraging the African Continental Free Trade Area (AfCFTA). However, this would require revisiting the rising xenophobia and draconian anti-African immigration policies it is currently implementingโpolicies that contradict AfCFTAโs principles of free movement of people and goods.
Furthermore, South Africa will need to revise its prohibitive laws and trade barriers on agricultural imports from other African nations.
