SA must strengthen diplomatic ties, diversify trade partnerships beyond the US

THE sudden hike of import tariffs by US President Donald Trump and his administration to countries across the world is set to reduce the volume of goods traded and affect citizen welfare across the globe.

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The Trump administration imple-mented a global 10% import tariff and a varying targeted approach tariff if a host of countries including South Africa.

The reciprocal import tariff to be levied on South African export goods to the US is set to rise.

Historical data show that yearly trade between SA and US amounts to $21.4 billion (R406.6bn) with the US as SA's second biggest trading partner after China.

The high tariff will reduce the com-petitiveness of South African export goods in American markets, leading to reduced demand of SA exports in US markets, low income to SA, trim job losses, lower household income and ultimately lower South African economic growth, South Africa and US trade.

South Africa exports platinum, locally assembled raw aluminium, ferroal-loys and agriculture products among other goods, to the US. The imposition of the US administrations 10% tariff hike could result in job losses in the mining, automobile, agriculture and many other industries.

More income losses to SA agricul-ture exports can also be experienced if the African Growth Opportunity Act (Agoa) expires in September 2025, if the US congressmen decide not to renew the agreement.

Given the low economic growth rate in South Africa in 2024, which is esti-mated at 0.6%, the tariff hike by the US will exacerbate sluggish economic growth and recovery from the Covid-19 pandemic.

Statistics also show that SA imports energy, products, machinery, vehicle, industries and other consumer goods.

The goods and services SA imports from the US play a critical role in devel-oping and sustaining local SA industry. SA can decide to source the goods from other markets, and if this happens with all economies where tariffs were imposed, the US will be worse off.

There is a possibility that economies which receive a tariff hike from the US will implement a reciprocal tariff hike to the US reducing the volume of global trade.