Shifting Tides: US-South Africa Trade Relations Under Trump’s New Policy

27th June 2025

by Joanna O. Yadeka

An in-depth analysis of the evolving economic landscape between the United States and South Africa amidst recent policy shifts.

On April 2^nd, 2025, President Donald Trump announced a series of reciprocal tariffs aimed at key trading partners, including South Africa, indicating a significant shift in US trade policy. The United States and South Africa have shared a complex trade relationship, underscored historically by their membership in the WTO, and also by preferential initiatives like the African Growth and Opportunity Act (AGOA). With AGOA set to expire in September 2025, the current administration’s stance introduces uncertainties that could reshape this bilateral relationship. This article examines the impact of President Donald Trump’s new trade policy on US-South Africa economic relations. An objective analysis of US-South Africa trade relations considers the historical context, policy shifts, and economic and geopolitical impacts, concluding with an African perspective on future trade strategies.

Introduction

The African Growth and Opportunity Act (AGOA) has been a foundation of US-South Africa trade relations for over two decades. Passed in 2000, AGOA was designed to give African nations, including South Africa, with duty-free access to the US market for over 1,800 products. This initiative aimed to bolster economic growth and improve US-Africa trade relations. South Africa has been one of AGOA’s biggest beneficiaries, with key industries thriving under its framework. For example, the automotive sector has flourished, with major brands like Ford and BMW assembling vehicles in South Africa for export to the US, with exports reaching up to $2.7 billion as of 2023. Also, the mining industry benefited, as essential minerals such as platinum and manganese—critical to US manufacturing—are sourced from South Africa. Additionally, agricultural exports like wine, citrus fruits, and nuts have found a strong market in the US, boosting local farmers and agribusinesses. Unarguably, AGOA has played a vital role in strengthening economic ties between the two nations, but with Trump’s new trade policies casting uncertainty over its future, South Africa may have to rethink its trade strategy moving forward.

Trump’s New Trade Policy: A Protectionist Shift on Tariffs & Bilateral Focus?

On April 2^nd, 2025, President Trump announced an increase in tariffs, imposing a baseline 10% tariff on all US imports and a targeted 30% reciprocal tariff on goods from South Africa. This move signals a major escalation in the US’s protectionist trade policy, directly impacting South African exports that previously benefited from duty-free access under the AGOA. What does this mean? This shift means South African exports now face higher import duties, making them less competitive in the US market. The shift effectively nullifies the benefits previously afforded under the AGOA. The imposition of these new tariffs is expected to significantly impact key South African export industries, particularly those that have historically benefited from AGOA’s duty-free access. For instance, South Africa’s automotive sector, which exported around $2 billion worth of vehicles and parts to the US in recent years, now faces much tougher trade conditions. Previously subject to a 25% import duty, these exports are now exposed to a 30% tariff under Trump’s new protectionist policy. While these rates may not be strictly cumulative, the new measures either replace or layer on top of existing duties, leading to markedly higher costs for South African vehicles in the U.S. market. The result? Reduced price competitiveness, likely lower demand, and pressure on the sector to find alternative markets or absorb the losses.

AGOA is set to expire by September 2025, Policymakers and businesses are left questioning what comes next, as the US could either refuse to renew AGOA—forcing South Africa into a new bilateral trade agreement under potentially less favorable conditions—or modify it by reducing benefits, tightening eligibility requirements, or even excluding South Africa entirely, especially with concerns over its growing BRICS ties and neutral geopolitical stance.

Arguably, though, AGOA’s relevance is already diminishing. South Africa already looks to strengthen its trade relationships with the EU, China, and African markets under the African Continental Free Trade Area (AfCFTA), reducing reliance on the US. Also, key sectors that once benefited from AGOA, like the automotive industry, are now facing higher tariffs under Trump’s new policies, making AGOA’s benefits less impactful. On one hand, if AGOA remains unchanged, its value will likely continue to erode due to US protectionist policies and South Africa’s diversification efforts, but if it is modified with stricter conditions, it could limit rather than enhance South Africa’s trade opportunities. SA can consider leveraging intra-BRICS trade and investment as a buffer against US-imposed economic hurdles. This raises the fundamental question: Is AGOA still the best trade vehicle for South Africa, or is it time to fully pivot toward new economic alliances?

Navigating Global Tensions: Diplomatic Dynamics & Geopolitical Shifts

With South Africa’s growing alignment with BRICS—Brazil, Russia, India, China- it now faces heightened pressure in light of Trump’s recent 30% tariff increase. This move reflects the US’s broader strategy to counterbalance the economic influence of China and Russia, both dominant players within BRICS, while also signalling potential economic consequences for South Africa’s deepening ties with the bloc. Beyond the impacts earlier considered, Trump’s tariff stance reshapes BRICS-South Africa relations, particularly if the US escalates its strategy to limit the bloc’s global influence.

For example, US officials have hinted that trade sanctions could be applied to members of BRICS, should they consider adopting a single currency; for South Africa, this presents a risk-reward calculation—doubling down on BRICS engagement could provide economic alternatives, but also inviting greater US scrutiny and possible retaliation. More so, diplomatic strains have grown due to South Africa’s sometimes stance on global conflicts. Its recent position on the Israel-Hamas conflict has drawn criticism from Washington, which favours a more aligned, pro-Western foreign policy. The Executive Order issued by President Trump in February 2025 also pointed to further issues. It suspended all U.S. aid to South Africa, citing concerns over its land expropriation policies and also alleged military cooperation with Iran.

Rethinking Trade: South Africa’s Path to Diversification

In light of the shifting US trade stance, South Africa faces a strategic inflection point. With AGOA’s future uncertain and Trump’s recent tariff hikes compounding trade pressures, the country must urgently rethink how it engages global markets. One clear path forward is diversifying trade relationships beyond the United States — not as a reactionary measure, but as part of a long-term shift toward greater economic resilience.

The European Union and the United Kingdom also remain strong prospects. South Africa already benefits from the Economic Partnership Agreement (EPA) with the EU and a separate deal with the UK, both of which offer preferential market access. Deepening these trade ties — particularly in value-added sectors like agri-processing, automotive components, and green technologies — could unlock growth while providing more predictability than current US trade policies. SA-Australia is another untapped potential for deeper trade collaboration, particularly in mining, agritech, and clean energy. In 2023, bilateral trade exceeded ZAR 20 billion, with room for growth in value-added exports and renewable technology partnerships

And what about Asia? With already developing relations with BRICS, China and India, for example, continue to drive global demand for minerals, food products, and energy. Japan and South Korea, with their high-tech manufacturing needs, offer strong potential for South African exports, especially if bilateral frameworks or sectoral agreements can be pursued.

Looking closer to home, the AfCFTA offers the most transformative potential for South Africa. Though not a substitute for external markets, it allows South Africa to build regional value chains, scale up local industries, and reduce its overdependence on any single trading partner. By strengthening intra-African supply chains, South African businesses can improve their export capacity, making them more globally competitive and investment-ready.

The goal isn’t to replace the US market overnight. Rather, it’s to position South Africa to thrive regardless of shifts in foreign policy — ensuring that its trade future is not determined elsewhere, but shaped deliberately from within.

What Does It All Mean? A South African Perspective on Rethinking Trade Strategy

The current trade landscape presents a challenging balancing act for South Africa. On one hand, maintaining strong trade ties with the US has long been a cornerstone of the country’s economic strategy. On the other hand, the uncertainty surrounding AGOA’s future, with its potential loss or reduction in benefits, forces South Africa to consider new partnerships and diversify its markets. As discussed in a recent African Business article, these dynamics are prompting serious debate about the long-term viability of AGOA under current US policy shifts.

Yet, amid these challenges, these shifts present opportunities. Though designed primarily to strengthen intra-African trade, the AfCFTA’s long-term impact goes far beyond regional integration. By harmonising trade rules, simplifying customs procedures, and fostering industrial collaboration across the continent, AfCFTA intrinsically lays the foundation for African economies—including South Africa’s—to become more competitive globally. It offers a path toward reducing dependency on traditional markets like the US. By boosting intra-African trade and industrialization, AfCFTA can help buffer against external trade shocks and promote stronger regional supply chains. Additionally, expanding access to EU and Asian markets—especially in China, India, and Southeast Asia—could provide alternative revenue streams for sectors affected by US tariffs. Also, there is a pressing need to strengthen local manufacturing and value-added production. By shifting away from raw material exports toward processed and finished goods, South Africa can reduce vulnerability to tariffs, create more jobs, and enhance global competitiveness. In this light, while Trump’s protectionist trade stance and AGOA uncertainty present significant risks, they also act as a wake-up call for Africa to take greater control over its economic destiny.

For South Africa in particular, leveraging AfCFTA could serve as a springboard to global diversification, allowing it to act as a logistics and manufacturing anchor between the rest of Africa and international markets. In this sense, AfCFTA isn’t just about unlocking access across Africa—it’s about building a platform for Africa to plug into global supply chains more competitively and sustainably. These developments highlight both the risks and the potential for transformation. The disruption caused by US trade policy changes may challenge existing trade flows, but it also forces Africa to accelerate its shift toward self-reliance and strategic market expansion. South Africa—and the continent as a whole—must proactively shape its trade future, leveraging AfCFTA and diversified partnerships to build a more resilient and globally competitive economy. After all, when one door closes, Africa shouldn’t just look for another— why not build its own!!!