International Relations and Cooperation Minister Ronald Lamola (left) and Minister of Trade Parks Tau (right) during a briefing on Monday. (DIRCO)
South Africa is preparing to diversify its export markets in response to the looming 30% tariff imposed by the US, which government officials say will cost jobs and shave 0.2% off economic growth.
The country is one of several facing punitive tariffs from the US as it moves to protect its own manufacturers and labour force. President Donald Trump announced the tariffs in April but delayed them for 90 days to allow countries to negotiate better deals. In July, he confirmed that they would take effect on 1 August. This has now been pushed back seven days.
“The 30% tariff set by the US is unfortunate and presents a setback in resetting bilateral trade,” International Relations and Cooperation Minister Ronald Lamola told a media briefing on Monday.
“We have been strengthening trade and investment partnerships with various trade partners. These efforts are bearing fruit, targeting markets across Africa, as well as in Asia, Europe, Middle East and the Americas.”
Affected sectors include agriculture, automotive and textile — all of which have benefited from duty-free access under the African Growth and Opportunity Act (Agoa). The government has said it will not retaliate against the US but has acknowledged the urgent need for the country to diversify its export market.
“South Africa seeks to conclude deals that promote value addition and industrialisation rather than mimic extractive colonial-era trade patterns,” Lamola said, adding that talks with Washington were ongoing, with the government applying a principled approach through diplomatic channels.
He said the 30% tariff had been factored into economic projections, with economists estimating a 0.2% reduction in growth. “This depends on our ability to find alternative markets. Notably, 35% of exports remain exempted from the tariffs.”
The director general in the trade department, Simphiwe Hamilton, said approximately 30 000 jobs would be at risk once the tariffs kick in.
Lamola said value addition and beneficiation have been the government’s priorities in its proposed trade framework, adding that its relationship with the US must be “mutually beneficial and respectful”.
The country is also pursuing other options including a clean energy trade and investment partnership with the EU, which has unlocked a R90 billion investment package for the export of sustainable aviation fuel by Sasol and of hybrid and electric vehicles.
“We’ve made significant progress in opening up vast new markets, like China and Thailand, securing vital protocols for products like citrus and others. With China alone being a $200 billion market, we are confidently expanding our reach and creating new opportunities for our agricultural producers,” Lamola said.
“Our government has not been idle; we are proactively and collaboratively diversifying our trade portfolio.”
He said under the coordinated leadership of the presidency, the department of international relations and cooperation and that of trade, industry and competition, South Africa was “making significant inroads into new, high-growth markets across Asia and the Middle East, including the UAE, Qatar and Saudi Arabia”.
Trade minister Parks Tau told the same briefing that calls from some South Africans urging the country not to negotiate with Washington were irresponsible, while conceding that the US had not responded to the country’s proposals.
“We can only make an offer, sit and wait, and hope. That is the reality,” Tau said.
Asked about the potential for increased trade with China, Tau said negotiations were ongoing through the Forum on China-Africa Cooperation. China has offered a memorandum of understanding on green energy and industrialisation.
Lamola said diversification efforts would include exporters collaborating to develop infrastructure, share market intelligence and coordinate activities to improve competitiveness.
“These efforts can help achieve economies of scale and efficiencies that enable them to be competitive,” he said.
The department of trade, industry and competition has set up an export support desk as part of a diversification strategy “to create resilience” in the economy. The desk is collaborating with export councils, industry associations and major exporters to the US to assist in accessing alternative markets.
On Monday, acting deputy director for export in the trade department, Willem van der Spuy, said producers, mostly from the Western Cape, had been requesting clarity on when the tariffs would take effect and what support measures were in place.
“The issue is to create resilience in our international trade environment. And through this support desk, we will add practical areas of cooperation. We will link them up with embassies, we will link them up with potential buyers, we will take the journey with them in terms of the trade barriers,” Van der Spuy said.
Lamola said the desk would “provide updates, advisory services, guidance on market entry and linkages to South African embassies and high commissions”.
According to Tau, the tariffs also presented an opportunity to accelerate implementation of the African Continental Free Trade Area, a pact which aims to create a single market for goods and services across the continent. It seeks to boost intra-African trade, reduce tariffs and non-tariff barriers.
Lamola echoed President Cyril Ramaphosa’s view that South African exports are not a threat to US industry: “Our exports are crucial inputs that support America’s industrial base. Our agricultural exports are counter-seasonal — they fill gaps, not compete.”
In his weekly newsletter, Ramaphosa stressed that the US tariffs underscore the urgency of diversifying South Africa’s exports and reducing reliance on select markets. He said the two countries had historically maintained complementary trade relations, adding: “Our exports are inputs into US industries.They support the US industrial base.”
He cited citrus exports as an example: “They are counter-seasonal and don’t threaten US production. The US sector has been in decline due to factors unrelated to imports — such as disease and low yields. Our citrus fills that gap.”
South African firms also invest heavily in the US, including in mining, chemicals, pharmaceuticals and food, said Ramaphosa, adding that this makes the country the largest African investor in the US.
Tau said Wednesday’s cabinet meeting would finalise the export support package.
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