GLOBAL TURMOIL Experts weigh in as SA braces for economic fallout from US tariff increases

INTERNATIONAL markets are in turmoil as US President Donald Trump's tariffs - which have been revised upwards for many countries - cause an effect anticipated for South Africa as the rand flirt with historic lows.

- NICOLA MAWSON

Old Mutual Group chief economist, Johann Els, has downgraded his South African growth forecast margin, already down around 7% to 6% to now expose expected softness in linked sectors but does not foresee a local recession. The South African Reserve Bank's most recent estimate was 1.9% for 2025.

“China and the Euro Area, South Africa's primary trading partners, are expected to adopt more stimulatory policy stances, which should help offset lost momentum,” said Els.

Yet, as Donald MacKay, founder and CEO of XA Global Trade Advisors, told IOL from a trade perspective: “It's ‘tariff up’ versus a currency; it's a race to the bottom. The rand has historically been pushed close to a historic low as investors steer away from the high risk of business and volatile emerging market currencies. The rand is at its lowest level in a month, having stopped short at around the R19.80/US mark it had traded at around 5pm as the US-China trade war continued.

Since the announcement substantial import tariffs by US President Donald Trump last week, described by critics as a protectionist move against the greenback.

The rand set its record low at the height of uncertainty during the COVID crises as investors pulled back on all risk positions and also traded within a whisker of R20 to the US dollar in June 2023 when the US Ambassador implications for economic sentiment, consumer spending, and global trade dynamics,” he said.

MacKay said that Trump's “Liberation Day” will affect 1.3% of the value of South African domestic product (GDP), adding the effects of Trumps tariff impositions on the country a “Liberation Day hangover,” he said. “Eight percent of South African exports go to the US during webinar on the topic. The US is important in our lives.

“Metals and aluminium exports are the hardest hit by the tariffs,” MacKay's presentation indicated.