Citrus Growers’ Association of Southern Africa says the additional 30% tariff imposed by the US will make South African citrus uncompetitive in the US market.
Image: Doctor Ngcobo / Independent Newspapers
Economists say that the 30% tariff hike on goods imposed by the United States against South Africa and other countries is a ploy to force US companies to return home and reopen their factories there.
They are of the view that the automobile and agriculture sectors are going to be the hardest hit by the tariff hikes.
Tariffs ranging from 11% to 50%, which now apply to imports from around 60 US trade partners, were announced by US President Donald Trump. Some countries were dubbed the ‘worst offenders’ for what Trump considers unfair trade practices.
The Department of International Relations and Cooperation (Dirco) and the Department of Trade, Industry and Competition said that the tariff hikes nullify the preferences that Sub-Saharan African countries enjoy under the Africa Growth and Opportunity Act (AGOA).
AGOA is a piece of legislation passed as part of the Trade and Development Act of 2000 in the US. It provides duty-free access to the USA market for almost all products exported from more than 40 eligible sub-Saharan African countries, including South Africa.
Products such as copper, pharmaceuticals, semiconductors, lumber articles, certain critical minerals, and energy and energy products were exempted from the reciprocal tariffs, the government said.
“The sweeping tariff measures will affect several sectors of our economy, including the automotive industry, agriculture, processed food and beverage, chemical, metals, and other segments of manufacturing, with implications for jobs and growth.
“The US represented 7.45% of South Africa’s total exports in 2024, while South Africa accounted for only 0.4% of US total imports. As such, South Africa does not constitute a threat to the US and where there is a trade imbalance in favour of South Africa, it is mainly on counter-cyclical agriculture products, and on minerals which are inputs in US industries,” the departments said.
Gerrit van der Merwe, the chairperson of the Citrus Growers’ Association of Southern Africa (CGA), said the additional 30% tariff will make South African citrus uncompetitive in the US market, especially since only the baseline US tariff of 10% will be levied on South Africa’s citrus competitors, who are mostly situated in South America.
He added that the 30% tariff will place an additional $4.25 per carton on SA citrus in the US.
“The US demand for SA’s quality citrus is clearly shown by the increase in exports to the US since 2017. The amount of citrus exported to the US has almost doubled since then, to over 6.5 million cartons. It is also estimated that 20 000 jobs up and down the supply chain in the US are linked to US-SA citrus trade,” Van der Merwe said.
The tariff hikes, which were expected to kick in on Wednesday, April 9, have been put on hold for 90 days by Trump.
Economist Professor Bonke Dumisa said American companies like Ford Motor Corporation chose to operate in South Africa and they remain here because it is relatively cheap to make cars in this country.
In America, the automobile industry outpriced itself out of the market and Americans are buying large numbers of vehicles produced in South Africa, including double cabs. Americans love South African wines and fruits, he said.
“Evidence is there that these things that Trump is doing are backfiring on him because it is the American people who need these products and those industries cannot be resuscitated in America. Cars in America are overpriced and people know that which is why they opt for imports from South Africa,” Dumisa said.
Dawie Roodt, chief economist at the Efficient Group, said it appears that the AGOA has been nullified, which will be detrimental, especially in certain industries, including agriculture and the motor industry.
“It will be bad for companies that manufacture stuff and export it to the United States,” Roodt said.
Overall for the macroeconomy, it is probably going to shave off 0.1-0.2% of economic growth, which is not a train smash. But for an economy that is hardly growing it is significant, he said.
“American companies exporting from SA to the US will be affected. And I think that exactly part of the reason Donald Trump is imposing all these tariffs is because he wants American companies to move back to the United States and start their factories there,” Roodt said.
The best thing that companies can do is to find other markets which is not going to be easy because everybody is in the same boat and everybody is going to try to find other markets. So, it will be quite crowded over there, he said.
Economist Gugulethu Xaba said: “We might see a lot of reviews of strategy by companies if this situation persists and obviously companies and corporates have to respond to this. Some may have to scale down their operations in South Africa or other countries and then return home.”
He said the tariffs imposed by the US were calculated using a formula that takes into account how much a given country sells to the US, subtracting how much that country buys from the US, which calculates a trade deficit.
“They then divided that trade deficit by that country’s exports to the US. That’s simple mathematics as to how they calculated this whole tariff regime of all the countries. And that is why you look at South Africa being 30% and yet you look at Lesotho, which is 50%, and many other countries which are far bigger than South Africa’s tariffs levy. So, that should show that it’s not an emotional decision that says it’s because they hate the government of the ANC in South Africa,” Xaba said.
The South African government said it will intensify efforts to diversify export destinations, targeting markets across Africa, as well as in Asia, Europe, the Middle East, and the Americas.
The government also pledged to continue building domestic supply resilience, reducing the cost of doing business, and increasing the competitiveness of our economy.
gcwalisile.khanyile@inl.co.za