By Lehlohonolo Lehana.
The United States (US) President Donald Trump has imposed a 30% tariff on South African exports to the US, which will come into effect on 1 August.
The move ends a 90-day pause Trump granted in April, when he first threatened action and slapped an immediate 30% duty on certain SA goods.
In a combative letter addressed to President Cyril Ramaphosa, demanding action on trade imbalances and long-standing market restrictions.
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.
“We have had years to discuss our Trading Relationship with South Africa, and have concluded that we must move away from these long-term, and very persistent, trade deficits engendered by South Africa’s Tariff, and Non-Tariff, Policies and Trade Barriers.”
Trump said that a tariff of 30% will be imposed on any South African product sent into the United States, which would be separate from all sectoral tariffs.
Any goods shipped to evade a tariff will only receive a larger tariff in response, he added.
“Please understand that the 30% number is far less than what is needed to eliminate the Trade Deficit disparity we have with your country.”
“There will be no tariff if South Africa, or companies within your country, decide to build or manufacture products within the United States, and, in fact, we will do everything possible to get approvals quickly and professionally.”
He noted that the approval process to set up manufacturing in the US would only take a few weeks, and South Africa would receive relief from the higher tariffs as a result.
The looming tariffs are in line with those announced in Trump’s “Liberation Day” speech in April, which sent the global economy into turmoil.
Initially planned to come into effect on 9 April, Trump hit pause on the implementation for 90 days to allow countries to negotiate better terms with the US.
In the interim, the flat global 10% tariff remained in effect.
The 90-day pause ends on 9 July, with the Whitehouse now giving countries a three-week advance notice of the impending implementation.
Trump’s 30% tariff in South Africa was deemed a discounted “reciprocal tariff” after he claimed that South Africa imposes tariffs of 60% on all American goods, directly and indirectly.
However, the 60% rate calculation was based on the trade deficit between the US and South Africa, not any trade or tariff policy.
Trump has also threatened to slap an additional 10% levy on “any country aligning themselves with the Anti-American policies of BRICS,” targeting the bloc of developing nations led by Brazil, Russia, India, China and South Africa as they gathered for a meeting in Rio de Janeiro.