US Shipping Inquiry Escalates Tensions with South Africa, Raising Trade Risks

A new shipping inquiry by the US Federal Maritime Commission (FMC) has sparked fresh concerns about US-South Africa trade relations, with experts warning that the investigation could lead to sanctions on South African exports. The inquiry, launched last week, aims to examine global maritime chokepoints and assess foreign government policies that may hinder US trade.

While South Africa’s Cape of Good Hope is not officially designated as a maritime chokepoint, foreign policy analysts caution that its shipping policies could come under scrutiny. Michael Walsh, a senior fellow at the Foreign Policy Research Institute, has highlighted potential risks for South Africa, citing recent precedents where the FMC has acted against foreign governments for disrupting international trade.

What the US Shipping Inquiry Covers

The FMC is currently investigating seven major maritime chokepoints:

• Northern Sea Passage

• English Channel

• Malacca Strait

• Singapore Strait

• Strait of Gibraltar

• Panama Canal

• Suez Canal

While South Africa is not explicitly mentioned, Walsh argues that its shipping routes and trade policies could easily be included in the probe.

“The Government of South Africa will need to be mindful of the new examination by the FMC,” Walsh warned.

US-South Africa Trade Under Pressure

Trade relations between the US and South Africa are already strained, with geopolitical tensions adding further pressure. The Trump administration recently expelled South African Ambassador Ebrahim Rasool, citing his criticism of US policies and his support for Palestine. Additionally, the US has imposed higher tariffs, dampening investor confidence and threatening South Africa’s economic growth.

According to the Office of the US Trade Representative, South Africa’s exports to the US increased by 4.9% to $14.7 billion in 2024. Key exports include agriculture (citrus and wine), automobile manufacturing, mining products, and metals. However, analysts warn that any US-imposed restrictions on South African shipping could negatively impact these industries.

Potential Consequences for South African Exports

If the FMC determines that South African policies disrupt international shipping, it could recommend penalties such as:

• Fines on South African-flagged vessels

• Cargo restrictions between South Africa and the US

• Sanctions affecting key exports like diamonds, oil, platinum, vehicles, and wine

Walsh also pointed out that a recent article co-authored by South African President Cyril Ramaphosa could further complicate matters. Ramaphosa, along with leaders from Malaysia and Colombia, publicly reaffirmed their stance on preventing arms shipments to Israel.

“From a trade perspective, this stance could have serious consequences,” said Walsh. “It provides the FMC with strong justification to take action against South Africa.”

Economic Uncertainty for South Africa

Economists have warned that the global trade environment is becoming increasingly volatile. Higher tariffs, supply chain disruptions, and inflation are already straining South Africa’s economic growth. Momentum Group chief economist Sanisha Packirisamy cautioned that weaker external demand and market instability could further impact the country’s economy.

With the FMC inquiry underway, South Africa now faces the risk of trade sanctions that could directly affect its export-driven industries. As diplomatic tensions continue to rise, businesses and policymakers will be closely watching the US government’s next move.

The FMC’s shipping inquiry has added another layer of uncertainty to US-South Africa trade relations. While no sanctions have been announced yet, the potential for trade restrictions poses a significant risk for South African businesses. As the investigation unfolds, South Africa may need to reassess its maritime policies to avoid economic fallout.

{Source IOL}

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