By Wandile Sihlobo, chief economist of the Agricultural Business Chamber of South Africa (Agbiz)
It is perhaps more prudent to work on the assumption that the duty-free access South African goods enjoyed through AGOA is over.
South Africa was not spared of the “Liberation Day” tariffs announced by US President Trump against various countries. South Africa will face tariffs of between 10% and 30% in the US for all products. The specificity of by-products is not yet clear.
Understanding the New US Tariff Reality
We know now that a baseline tariff of 10% will apply to imports from all countries. It remains unclear if there are differences in the remaining 20% (that makes up the rest of the 30%) duties levied against South Africa.
Under this environment, it is prudent to assume South Africa will be out of the AGOA (the African Growth and Opportunity Act), which afforded us duty-free access to the US for a range of products, including the auto industry and agriculture.
We suspect there may be some differences product by product, but that will only be clear once the US authorities release more information. We know the reciprocal tariffs will generally range from 10% to 60% (and to 30% in the case of South Africa). The exact levy will be based on what the White House Council of Economic Advisers thinks is the sum of tariffs and non-tariff barriers on US goods to a specific country.
Indeed, some products face higher tariffs in the South African market, but there are rebates through the International Administration Commission of South Africa (ITAC) to assist any country that requires relief. South Africa is arguably amongst the countries with the lowest tariffs, which some local stakeholders have previously argued was a policy mistake at the onset of South Africa rejoining the global economy after 1994, following years of isolation.
The details of how the various domestic industries engage with this will also become clear in the coming days and weeks. But what I must stress regarding agriculture is that the US accounted for 4% of the total US$13,7 billion in exports in 2024. While this may seem small, it is significant for specific industries, particularly citrus, grapes, wine and fruit juices. Since the inception of AGOA, South Africa’s share of agricultural exports to the US has remained at similar levels.
Agricultural Impact Assessment and the Need for Market Diversification
With the 30% tariff, while South African agricultural competitors such as Brazil, Chile and Australia will face only 10% of the tariff, we will surely face a competitiveness problem in the US market. And yes, the tariff is a tax on the US consumer, not South Africa. However, it affects South African products’ penetration rate in these markets.
It may not be easy and diverting products to other friendly markets will take time. Still, this should be the main preoccupation of the Department of Agriculture, assisted by the Department of Trade, Industry and Competition. The Middle East and Asia should be the primary focus for South Africa to build access, mainly in China, India and Saudi Arabia.
The Middle East promises more potential for expansion, as it is not as saturated as what we observe in the EU, and there are no domestic competing farmer interests in this region. While a significant share of South Africa’s agricultural products ia already exported to the Middle East, the presence of South African agriculture in this region is arguably still peripheral. For example, according to Trade Map data, Saudi Arabia (UAE) imports roughly US$25 billion of agricultural products annually. South Africa is one of the most minor exporters, accounting for a mere 1% of the Saudi Arabian imports, and ranks 31st on the agricultural imports list.
The Middle East: An Underdeveloped Export Destination with Significant Potential
Moreover, the UAE is a large agricultural market that imports roughly US$22 billion of agricultural products annually. South Africa has a 2% share and is the 16th largest supplier. Qatar imports about US$4 billion of agricultural products a year. But here, South Africa also plays a minor role, ranking 10th on the list of suppliers to Qatar and having a 2% market share in Qatar’s agricultural imports.
The countries that occupied a larger market share in these Middle Eastern countries were India, Brazil, Australia, the United States, Canada, New Zealand, the United Kingdom, Denmark, the Netherlands, Italy, Spain, Argentina, Russia, France and Turkey. Regarding the products, the Middle East primarily imports various meat products, grains, oilseeds and fruits, amongst other products.
Given this peripheral participation and the possibility of increasing South Africa’s agricultural production in the coming years, there remains room for greater involvement in the Middle-East market. There is a need for targeted promotion and marketing of products, along with government support, to nudge the Middle Eastern countries to address any remaining phytosanitary barriers and tariffs for South African products in these countries.
The case for pushing more agricultural exports to China is clear in Asia. In 2023, China was a leading agricultural importer, accounting for 11% of global agricultural imports, which totalled over US$200 billions. The US, Germany, the Netherlands, the UK, France and Japan trailed China.
China: A Strategic Priority for Agricultural Export Growth
The leading suppliers of agricultural products to China are Brazil, the US, Thailand, Australia, New Zealand, Indonesia, Canada, Vietnam, France, Russia, Argentina, Chile, Ukraine, the Netherlands and Malaysia.
South Africa is the only African country in China’s top 30 agricultural suppliers, and ranked 28 in 2023. Still, South Africa remains a negligible player in the Chinese agricultural market, accounting for a mere 0.4% (US$979 million) of China’s agricultural imports of US$218 billion in 2023.
China is already one of South Africa’s major agricultural markets for fruits, wine, red meat, nuts, maize, soybeans and wool. However, there is room for more ambitious agricultural export efforts.
What the South African authorities should argue for in China is a need for lower import tariffs and the removal of phytosanitary constraints on various products. This would unlock the export potential into this market.
This diversification approach for South Africa’s agriculture is more urgent. Beyond the US tariffs, we will have a boom in harvesting various fruits in the coming years, which will require a market.
