WATCH: Trump imposes 30% tariff on South African exports to address trade deficit
The tariff hike is set to come into effect on 1 August. Kfm Mornings chats to economist, Dawie Roodt who explains why this 'is not good' for South Africa.
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Kfm Mornings with Darren, Sherlin, and Sibs speak to economist, Dawie Roodt, about the latest developments regarding US President Trump's 30% tariff hike on SA exports.
Watch below:
US President Donald Trump has announced that goods from South Africa will be subject to a 30% tariff from 1 August 2025.
The news was in a letter that Trump addressed to President Cyril Ramaphosa and published on his Truth Social Media account.
Trump said that, while the two countries have a strong trading relationship, the trade deficit between the two countries was too large.
“We have decided to move forward with you (South Africa), but only with more balanced and fair trade,” said Trump.
Roodt explains why "this is not good" ...
"Basically, what it comes down to, is that Donald Trump is of the opinion that we export a lot of stuff to the United States and that's good for our businesses... we export stuff to the United States and they export stuff to South Africa... but he [Trump] reckons there's a difference between what we export to them and how much they export to us..."
- Dawie Roodt, Economist
"He [Trump] wants this way to be more balanced and in order to get it more balanced, he is going to charge a tariff on all stuff they export to the United States... and this tariff is set at 30%. The idea behind that is to make it more difficult for South Africa to export to the United States and make it easier for the US to supply to their own market and behind all of that, he wants to reduce the trade deficit between us and the United States."
- Dawie Roodt, Economist
Roodt believes "there's a lot of things" wrong with the calculations and rationale behind this tariff hike.
"The way he calculates that is wrong. The rationale behind the 30% is also questionable... there are many questions around this."
- Dawie Roodt, Economist
Roodt says this gets more complicated because the tariff hike doesn't specify which items will get the new tariff and questions what will happen with the United States' previous trade agreement with South Africa, namely the African Growth and Opportunity Act (AGOA).
"We don't really know what is included and what is excluded. For example, we have another trade agreement called the AGOA trade agreement and the AGOA trade agreement says we can export to the United States without any tariffs on certain things. So, does this now mean that AGOA is off the table? I suspect so, yes and now we've got a new tariff of 30%."
- Dawie Roodt, Economist
"There are many moving parts that we are uncertain about... the real question is: how is this going to impact on the South African economy?"
- Dawie Roodt, Economist
Roodt believes that Trump's tariff increase will impact South Africa, especially in an economy that's already "hardly growing."
"The impact of these tariffs on the South African economic growth is going to be not that bad... approximately eight or nine percent of our exports to the United States so if there's a tariff of 30% on those exports, it will impact on how much we produce in South Africa and that will impact on economic growth - how much, is difficult to say..."
- Dawie Roodt, Economist
"So it's not that much impact on the economy but given the fact that the South African economy is hardly growing, this is not good for us. We want economic growth and even a little bit of a head wind like this is not good for the South African economy."
- Dawie Roodt, Economist
Roodt also questions who will pay for the additional tariff hikes on specific items?
"The question now is: who's going to pay for this additional levy? Is it going to be our local farmers that will have to cut back on how much they ask on their citrus, for example? It will probably be paid by a combination of local exporters and consumers of the United States."
- Dawie Roodt, Economist