‘A Total F*** Up’: Experts React as Trump’s Tariff Hike Shakes South African Economy

South Africa is facing growing economic uncertainty after a fresh wave of US tariffs came into effect at midnight, leaving markets rattled and the rand teetering on the edge of historic lows.

President Donald Trump’s move to raise tariffs — some as high as 104% on Chinese goods and up to 46% on other countries — has sent ripples through global trade. For South Africa, the spillover effects are already visible.

“It’s a f*** up, to use a technical economics term,” said Donald MacKay, CEO of XA Global Trade Advisors.

Rand Nears Record Low as Investors Pull Back

The rand dipped sharply on Wednesday, falling 8.2% to R19.64 against the dollar by midday, briefly touching R19.82 — its weakest in almost a year. Uncertainty over local politics, especially speculation around the DA’s future in the Government of National Unity (GNU), has added fuel to the fire.

“The volatility we’re seeing is driven by risk-off sentiment as investors flee emerging markets,” said Bianca Botes, director at Citadel Global. “These tariffs are just the tip of the iceberg.”

South African Exports in the Crosshairs

South Africa exports roughly 8% of its goods to the US — including vehicles, aluminium, and various metals — making it highly exposed to shifts in US trade policy. Analysts warn that vehicle and aluminium exports are particularly vulnerable under the new tariffs.

“Trump’s ‘Liberation Day’ will knock 1.3% off South Africa’s GDP,” said MacKay in a webinar, adding that the impact could be long-lasting if the situation escalates.

Sector-by-Sector Breakdown

According to Old Mutual chief economist Johann Els, while direct exposure to the US appears modest at first glance, the ripple effects across industries could be significant.

“Our official stats show a $2 billion trade gap with the US, but the impact on sectors like vehicle manufacturing and agriculture could be acute,” said Els.

He added that base and precious metals are largely exempt — softening the overall blow — but the risk of job losses and revenue hits in key export sectors remains.

SA Growth Forecast Downgraded

Els has adjusted South Africa’s growth outlook downward, from 2.2% to 1.7% for 2025, citing weaker export potential linked to the US and global uncertainty. The South African Reserve Bank’s forecast currently sits at 1.9%.

“The big question is how quickly the US economy responds,” he said. “A US recession in 2025 is now a baseline scenario.”

Could Interest Rate Cuts Save the Day?

If inflation slows and the US dollar softens, Els believes South Africa’s Reserve Bank could start cutting rates from mid-year — potentially bringing relief to businesses and households.

But that depends on two things: a calmer global outlook and political stability at home.

“The GNU has to hold. If the DA leaves, we lose what little investor confidence we’ve gained since last year,” warned Els.

While Trump defends the tariffs as a way to “restore fairness” in global trade, South African economists and business leaders see trouble ahead. Whether or not the local economy can weather the storm will depend on diplomatic agility, domestic political unity, and how quickly global markets adjust.

For now, South Africa’s export engines are running into heavy headwinds.

{Source IOL}

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