South Africa’s Biggest Employers Face Crisis as US Tariffs and AGOA Exit Loom

South Africa’s two biggest job-creating sectors—agriculture and automotive—are on the brink of a crisis. A sharp escalation in trade tensions with the United States, coupled with the looming expiry of the African Growth and Opportunity Act (AGOA), has business leaders warning of a “perfect storm.”

US President Donald Trump has launched a fresh round of tariffs as part of a renewed global trade war. Effective from 5 April, a baseline tariff of 10% will apply to all US imports, with a higher 31% tariff specifically targeting countries with significant trade imbalances. South Africa is on the receiving end of the latter.

For the country’s economy, this spells serious trouble.

A Blow to Agriculture and Automotive Sectors

The US is South Africa’s second-largest trade partner, and the new tariffs are expected to hit the agriculture and automotive industries the hardest—two sectors that collectively employ over 1 million South Africans. While minerals and metals are mostly exempt, the ripple effect through exports and supply chains is expected to be severe.

The situation is further compounded by the likely end of AGOA, a trade agreement that currently allows South Africa preferential access to US markets. AGOA is up for renewal in September 2025, but the South African government admits that the new tariffs already erode its benefits.

Losing AGOA entirely would deepen the blow, removing a vital trade buffer just when the country needs it most.

Diversification Is No Longer Optional

Chief Economist at Agbiz, Wandile Sihlobo, says that while South Africa must continue efforts to retain access to the US market, it must also plan for a post-AGOA future.

“South Africa should not rest on its current export success. Diversifying trade partners is essential,” he said.

In 2024, South Africa’s agricultural exports grew by 3% to $13.7 billion. Nearly half of these exports went to the African continent, while the EU, Middle East, Asia, and the UK were also significant destinations. Yet there remains enormous untapped potential.

• Saudi Arabia imports $25 billion in agricultural goods annually.

• The UAE brings in $22 billion, with South Africa supplying just 2%.

• Qatar spends $4 billion on agricultural imports, but South Africa ranks only 10th as a supplier.

There’s clear room to grow—and fast.

Focus on Intra-African Trade

Busi Mavuso, head of Business Leadership South Africa (BLSA), believes that South Africa’s best opportunity lies closer to home.

Currently, only 17% of South Africa’s merchandise trade is within Africa. Mavuso emphasizes that the African Continental Free Trade Area (AfCFTA), fully operational since late 2022, could be the game-changer needed to cushion the country from global trade shocks.

“Both government and business need to prioritize AfCFTA,” she said. “It’s not just about surviving this crisis—it’s about reshaping how South Africa engages with the world.”

Government Strategy: Stay Calm, Diversify Fast

To its credit, the South African government has chosen diplomacy over retaliation, keeping communication open with the US rather than escalating tensions.

However, Mavuso cautions that South Africa isn’t at the front of the queue in terms of future US trade negotiations. “That makes it all the more urgent that we focus on what we can control: building new trade relationships elsewhere.”

Ministers like Ronald Lamola and Parks Tau have echoed this sentiment, urging the country to widen its trade horizons, especially in Africa, the Middle East, and Asia.

South Africa stands at a critical economic crossroad. With the dual threat of higher US tariffs and a potential exit from AGOA, the time for strategic action is now. Diversifying trade routes, deepening ties within Africa, and tapping into underutilized global markets is no longer just a good idea—it’s a survival strategy.

{Source BusinessTech}

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