South Africa is likely to withstand the economic fallout from the United States’ new 30% tariff on imports, according to fresh research by the Bureau for Economic Research (BER) released on Monday.
The study, authored by Louw Pienaar and Claire Bisseker, finds that the overall impact of the tariff measures “will not be as severe as previously feared,” although some export industries — particularly manufacturing and certain agricultural products — face notable headwinds.
The BER said most of South Africa’s exports to the US are concentrated in the mining, manufacturing, and agricultural sectors, with mining products largely exempt from the new duties.
“About half of the manufacturing firms affected reported that the tariffs were not having any impact on their sales as of the end of August,” noted the report.
“The other half reported that their export volumes had either fallen or ceased outright. But only about a third of manufacturing firms said they were considering their options in terms of exploring new markets.”
A companion study by the Bureau for Food and Agricultural Policy (BFAP) found that the aggregate effect of the 30% tariff hike on South Africa’s agricultural economy would be “marginal,” and far less damaging than domestic challenges such as animal disease outbreaks and the underperformance of major ports.
Fortunately, said the BER, SA’s biggest agricultural industries – poultry, maize, cattle, milk and potatoes – have limited export exposure to the US.
Of the R266 billion in agricultural goods South Africa exported globally last year, only 4% (R10.7bn) went to the US. In the Western Cape, the US share of agricultural exports stood at 7%, nearly double the national average.
The US market, the BER noted, remains a premium destination that has grown strongly in recent years and remains key to the Western Cape’s export performance.
BFAP’s modelling shows that across five key food exports — grapes, plums, wine, soft citrus, and oranges — the 30% tariff would result in an estimated R6bn loss in gross production value over the next decade (2025–2034), equivalent to R600 million a year compared to a scenario with no tariffs.
“For a typical Western Cape citrus farm with a 30% export exposure to the US, the impact could be considerable as it implies a 32% reduction in net farm income on average annually over the coming decade,” added the BER.
In the wine industry, a 30% US tariff (compared to 10% for Argentina, Australia, Chile, and New Zealand) could lead to an annual R92m revenue loss, as producers face both price declines in the US market and forced diversion of exports to less lucrative destinations.
The BER cautioned, however, that these projections depend on “uncertain assumptions about former president Trump’s capricious tariff policy and how market participants may respond.”
“What we do know for sure is that the impact on SA will be significantly less severe than it could have been thanks to swift adjustments within the different supply chains and significant investments in market access by the industry,” said the BER.
“However, a lot more needs to be done, and (worryingly) much will depend on the government’s capacity and its ability to execute a more agile trade policy.”
To unlock further growth, BER urged South Africa to expand market access, remove technical trade barriers, and negotiate lower tariffs in key export destinations.
“This will require SA to reconsider the misalignment between its trade policy and its broader industrial policy goals. Over the past decade, export-led growth has been one of the main drivers behind the agricultural sector’s strong performance, even as the rest of the economy has slowed,” said the report.
“To continue increasing our agricultural exports, and to replace those displaced from the US market, will require our BRICS allies to lower their tariffs so we can export more to them more competitively, as our Southern Hemisphere counterparts often face much lower tariffs in those markets.”
The BER said that SA’s overarching industrial policy continues to be largely focused on import replacement or localisation. As such, it yearns to levy protective measures against these same BRICS countries to promote growth in new or existing (uncompetitive) domestic industries.
BUSINESS REPORT
