The South African economy will likely emerge from the crisis with a reduced dependence on the American market
It’s been six months since the US administration made a concerted effort to exert pressure on South Africa. This move was clearly motivated by long-time political and economic contradictions, but was framed as ‘protecting the interests’ of the white minority. As a result, South Africa became one of the first victims of the new US policy: it lost funding, faced diplomatic boycotts from Washington, and saw a sharp rise in tariffs.
Despite South African President Cyril Ramaphosa’s visit to Washington in May and his meeting with US President Donald Trump, the measures were not lifted. Since then, America’s interest in regard to South Africa and the ‘issue’ of white farmers has significantly waned. This shift can be partly attributed to Elon Musk’s departure from the White House and the US focus turning to other ‘moderate’ BRICS members—India and Brazil.
So far, the most tangible consequence for South Africa has been a reduction in US financial aid ($200-$300 million annually), which was mostly directed toward various NGOs and universities—traditional opponents of the African National Congress (ANC), the largest party in the Government of National Unity (GNU).
The 30% tariffs imposed by the US on all South African exports in August could have longer repercussions, especially for the automotive and wine industries. These tariffs are based on a fairly simplistic formula used for most countries, taking into account the trade deficit and the volume of imports from the US.
However, the immediate effect appears to be emotional rather than practical; for instance, the Purchasing Managers’ Index (PMI) for South Africa shows only modest growth in August, with export orders declining. Given that any losses are likely seasonal or short-term, most South African manufacturers have enough resilience to withstand one or two years of unfavorable conditions and adjust their processes accordingly.
The South African government has employed three main strategies in its dealings with the US: ignoring the issue, attempting to negotiate, and finally accepting the situation and adapting to it. Ramaphosa’s proposals to ramp up imports from the US, which he talked about during his May visit, did not lead to any changes, at least publicly.
At that time, South Africa put forward a comprehensive Framework Deal proposing solutions including digital trade promotion, investments, and non-tariff barrier removal. Reports indicate that the two sides discussed collaboration on supplying critical minerals and prospects for exporting LNG from the US to South Africa. These may be some of the concessions that South Africa is willing to make in the negotiations regarding tariff revisions. Despite these overtures, the tariffs were enacted in August.
In recent years, the South African government has adopted a more proactive approach to its economic policy. While certain sectors – like social services, transportation, logistics, and energy – demonstrate a high degree of state paternalism, others, including banking, much of the mining industry, agriculture, and foreign trade, have traditionally operated under ultra-liberal principles with the minimal involvement of the government.
However, US pressure seems to be driving gradual changes here, prompting the government to expand its influence. For example, in early August, the government launched an Export Support Desk to assist exporters through financial programs aimed at supporting working capital and equipment via the Localization Fund and the Export & Competitiveness Support Programme (ECSP).
In addition to supporting local producers, South Africa is actively seeking new markets. Many countries, especially those in the Global South, find themselves in similar situations due to unilateral tariffs, making it easier to explore mutually beneficial partnerships. Negotiations are ongoing with nations such as Chile, Peru, New Zealand, Indonesia, Thailand, Bangladesh, and regional alliances like the Southern Hemisphere fruit exporters group.
Interestingly, South Africa’s internal political landscape hasn’t changed much. The Democratic Alliance (DA) – a traditionally pro-Western and opposition party which joined the coalition government last year – has taken a moderate stance on this crisis, refraining from harsh criticism of its partners. While the DA, however, links the US tariffs to race-based elements of South Africa’s policy, such as Black Economic Empowerment and the land reform, these issues remain critical for the ANC in the context of restoring historical justice.
At the same time, the Expropriation Act – the controversial part of the broader land reform which the US has criticized – has not taken effect, with the president still to make a specific statement in this regard. Whether the delay is a result of American pressure is unknown, especially since the bill has been before Parliament since 2020. The South African government may view this “Chekhov’s gun” as a bargaining tool in negotiations with coalition partners and a way to gain electoral support during challenging times, as well as a leverage in discussions with the US.
South Africa’s strategy appears to blend diplomacy, domestic support, and market realignment aimed at reducing reliance on the US and stabilizing key economic sectors. Yet, significant hurdles remain, like domestic reforms, global trade shifts, and replacing lost US market access will take sustained effort.
In any case, the South African economy will likely emerge from the crisis with a reduced dependence on the American market, which means Washington will once again lose its leverage. South African universities, facing funding cuts, are likely to seek new partnerships in the East, particularly with BRICS nations. Meanwhile, the automotive industry may shift its focus from assembling American and European vehicles oriented for the US market, and instead start producing more affordable cars—for example, Chinese or Indian brands that cater to the burgeoning African middle class.
Structural transformations in the economy — both globally and in South Africa — are inevitable, and are driven by a fundamental shift in the balance of power in world politics and economics. And America’s actions only seem to accelerate this process.
