By Lehlohonolo Lehana.
South Africa is one of the beneficiaries of Donald Trump’s surprise move to suspend punitive tariffs exceeding 10% on all countries except China.
With a 30% tariff on South African imports kicking in on Wednesday, the reversal to 10% came as a welcome surprise.
The rand, which hit its worst-ever levels against the US dollar at R19.93/$ saw an immediate pull-back, gaining 2% to settle around R19.30/$.
But the currency remains incredibly weak, sitting at R19.45/$ by 11h00 on Thursday (10 April)—reflecting the ongoing global and local woes.
While Trump’s abrupt reversal of his tariff stance offers a potential path to stabilisation, the trade war with China—where tariffs were raised to 125%—will continue to impact markets negatively.
The reversal has also not shifted the dial on the African Growth and Opportunity Act (AGOA), which economists and analysts see as certainly done, especially for South Africa.
African nations and the US will hold talks in June or July on a trade pact that provides duty-free access to the world’s largest economy, South African Trade Minister Parks Tau said, adding it will be hard to salvage the arrangement that tariffs superseded last week.
“Its going to be difficult” to save the African Growth and Opportunity Act (Agoa), Tau said on Radio 702 Thursday.
Agoa is due to expire in September, and the continent’s trade ministers are meeting in Democratic Republic of the Congo on Tuesday where they will discuss a collective way forward, he said.
Tau said South African officials are also holding talks with other countries to find alternative markets.
Agoa is legislation approved by the US Congress in May 2000 to allow certain African countries preferential access to the US markets. South Africa has been one of the countries that have benefited from this legislation for over two decades.