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 – come into effect at midnight with a negative spillover effect anticipated for South Africa as the rand flirts with historic lows.

- NICOLA MAWSON

Old Mutual Group chief economist, Johann Els, has also downgraded his South African growth forecast margin, citing down from 1.4% to 1.0% to expose expected softness in linked exports but does not foresee a local recession. The South African Reserve Bank’s most recent estimate was 1.2% for 2025.

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

Yet, as David MacKay, founder and CEO at Global Trade Advisors, told IOL from a trade perspective: “It’s far from a cyclical economics storm.”

The local currency has already been pushed close to a historic low as investors steer safe havens away from the high-risk, high-return, environment of volatile emerging market currencies. The rand is at its lowest level in a month, having dropped to R19.91 against the greenback to trade at R19.80 around midday on Wednesday and slumping as low as R20.02 on the close.

One Europe has declined at 3.9%, with recent drops being the result of uncertain rand political given speculation that the US may reassess the Government of National Unity (GNU) as well as the 30% imposition of tariffs on South African goods being exported to the US.