South Africa's Tau and Lamola outline strategy to urgently tackle new US tariffs

South Africa unveiled a multi-pronged strategy on Friday to counter the impact of new US tariffs set to take effect on Wednesday (April 9) aiming to protect its industrial base and pursue inclusive economic growth amid global trade challenges.

Minister of International Relations and Cooperation, Ronald Lamola, and Minister of Trade, Industry and Competition, Parks Tau, in a joint statement, said, "South Africa will continue to navigate the challenges and opportunities these measures present with resilience and innovation. Guided by its national interests and aligned with its broader trade and industrial policy, South Africa is committed to ensuring economic growth, industrial development, and the well-being of its citizens."

US President Donald Trump on Wednesday unveiled a 10% tariff on all imports, with significantly higher rates for countries with trade surpluses - 30% for South Africa, 34% for China, and 20% for Europe, the country’s other large trading partners. 

The hefty tariffs imposed by Trump on imports to the world’s largest economy left a trail of turmoil on global financial markets,

The 31% tariff regime, imposed by the US on South Africa and much of the world, has prompted Pretoria to prioritise diversification, regional trade, and value-added production.

The tariffs effectively nullify preferences under the African Growth and Opportunity Act (Agoa), impacting sectors like automotive, agriculture, and manufacturing. The US accounted for 7.45% of South Africa’s exports in 2024, while South Africa made up just 0.4% of US imports, raising questions about the tariff’s justification.

"South Africa needs clarity on the basis for the 31% to be implemented by the US," the ministers said. This is as South Africa’s average tariff stands at 7.6%.

South Africa’s response includes negotiating favourable agreements to retain US market access, with a focus on exemptions and quotas. The statement said it was important to secure"critical access" for industries, aligning with the national interest of safeguarding livelihoods. It also addressed the  February 7, Executive Order, by US President Donald Trump, currently under review by an interdepartmental team.

To reduce reliance on the US, South Africa will diversify export markets, targeting Africa, Asia, Europe, the Middle East, and the Americas. The African Continental Free Trade Area will be leveraged to boost intra-African trade, a move the ministers said supports "a better Africa and world."

The Southern African Development Community and existing trade pacts, such as the SADC-European Union Economic Partnership Agreement (and agreements with MERCOSUR and Japan, will also be tapped.

The government plans to shift industries towards value-added production, transforming raw materials into finished goods to cut tariff exposure and spur innovation.

"This supports South Africa’s industrial policy objectives of boosting local manufacturing and creating jobs," the statement said. Strategic investments in affected sectors, alongside infrastructure modernisation, aim to stimulate domestic growth.

Globally, South Africa  will forge alliances to enhance its influence in trade talks, a priority underscored during its G20 presidency. The ministers cited recent G20 Trade and Investment Working Group discussions, noting supply chain diversification as a shared challenge for open economies.

Certain products, including copper, pharmaceuticals, and critical minerals like chrome ore - 97% of which meets US needs - are exempt from the reciprocal tariffs. Steel and aluminium, already under Section 232 tariffs of 25%, are also unaffected. Still, the broader measures threaten jobs and growth in key sectors.

The ministers reiterated South Africa’s commitment to a "mutually beneficial" US trade relationship but called the tariffs "punitive" and a "barrier to shared prosperity." They stressed the urgency of negotiating a new bilateral agreement for "more fair-trade relations" and long-term certainty.

"South Africa will continue building domestic supply resilience, reducing cost of doing business and increasing competitiveness," the statement said.

The joint statement comes hot on the heels of Minister of Trade, Industry, and Competition Parks Tau announcing earlier this week that South Africa will urgently seek a meeting with US authorities. 

Tau expressed concern over the US decision to impose tariffs. He pointed out that South Africa’s automobile exports account for just 0.99% of total U.S. automobile imports and 0.27% of auto parts, emphasising that these figures do not pose a threat to the US industry.

However, Dr Neva Makgetla and Nokwanda Maseko, senior economists at Trade & Industrial Policy Strategies (TIPS), warned in a note on  the implications of US tariffs on South Africa that, "renegotiating the tariffs will likely take months or years, unless there is a strong backlash within the US against the entire programme.

"Even if the US government were genuinely prepared to negotiate the exorbitant tariffs it has imposed on South Africa, it does not have capacity to engage with all of the countries that it haspenalised. South Africa is unlikely to be high on its priority list for the negotiations process," they said.

The TIPS economists further said, "While the 30% tariff is both unfair and unfounded, South Africa has virtually no capacity to respond in kind because it accounts for only around a quarter of a percent of all US trade. By extension, the only realistic short-term response is to step up collaborative efforts to enable South African exporters of manufacturers to find alternative markets."

The economists said the South African government, industry associations, oversight committees for the master plans, and other institutions with relevant capacity should urgently come together to develop programmes to assist the affected companies to identify and access new markets.

"An intergovernmental task team should prioritise the agreements and protocols needed to facilitate new market development. South African trade missions need to support the impacted firms both with finding new customers and where necessary to establish new supply chains," TIPS advised. 

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