By Michelle van der Spuy
From experts to politicians are uncertain about what will happen on 9 July when the temporary suspension of America’s sharp increase in import tariffs comes to an end. South African exporters’ only option: Hold your breath and make new plans.
The US currently levies a nearly direct tariff of 10% on all imports. If the temporary suspension of import tariffs, announced by President Donald Trump on 9 April, is not extended, a tariff of 30% will be levied on products from South Africa.
Pres. Cyril Ramaphosa and other South African delegates met with Trump in Washington on 21 May to restore bilateral relations between the United States and South Africa. However, the proposed framework agreement discussed during that visit has still not been accepted.
“As this agreement is still under discussion, it is still unclear what the final tariff for South African goods will be from 9 July,” said John Steenhuisen, Minister of Agriculture, who was part of the meeting with Trump. “It is hoped that the work still being done to meet America’s requests for market access will be a positive sign to America that South Africa is addressing the trade deficit between the countries and that this will ultimately lead to a lower tariff.”
Diversification Will Take Time
Wandile Sihlobo, chief economist at Agbiz, says while diversifying exports to other regions is good advice, America cannot be completely eliminated as an export market. According to him, this is also easier said than done. China appears to be a golden opportunity for agricultural exports, but South Africa is subject to high import tariffs and phytosanitary barriers there.
“Changing export markets is another issue and it is not as simple as selling citrus to Bulelani instead of Gary. After issues around tariffs and phytosanitary matters (e.g. measures against diseases and pests) have been resolved, a business relationship must first be developed and marketing done.
“There is also the issue of consumer preferences and purchasing power in the various regions, which will influence the demand for South African products in these markets.”
Although he believes South Africa’s strategy for diversifying exports should be built upon, it is not a quick fix to avoid problems in the US market.
“It will require concentration from the government and then time from the private sector to pay attention to business relationships and logistical issues, especially as far as the agricultural sector is concerned. This is part of why we need to maintain our US market share for South African products.”
‘Expropriation Act a Side Issue’
Piet Croucamp, a political analyst at the North-West University Business School, believes South Africa is not a big enough trading partner of America that the two countries’ trade relations will be high on Trump’s priority list before 9 July.
“So far, the only initiative has come from South Africa. They have been in contact and have had discussions with the right people.”
According to him, the view that South Africa should do something substantial with the Expropriation Act is not “correct”. “I don’t think the Expropriation Act hinders trade between South Africa and America. I think it is a side issue and was part of the ‘theatrics’, but it is not important.”
Although he believes South Africa will not have a trade plan with America in place before 9 July, he also thinks it will be impossible for America to have an agreement in place with every country by then.
“Many countries will probably be treated with the same brush. It may happen that they single us out, but I would be surprised. There are simply too many things happening in America right now for them to focus specifically on us.”
