Trump's Tariffs and South Africa's Expropriation Act: A Dual Threat to the SA and Global Economy on ‘Liberation Day’

The main issues

• Trump’s 30% tariff hike targets South Africa, raising trade barriers and potentially damaging the country's economy and key industries.

• US flags South Africa’s Expropriation and Public Procurement Acts as threats to competition, deterring investment and complicating trade relations.

• Experts predict tariff rollback within 6 to 12 months due to economic strain, market volatility, and mounting political pressure on the US.

Trump’s Tariff Hikes: A Looming Threat to South Africa’s Economy and Global Trade

‍US President Donald Trump has just announced a sweeping 30% tariff hike on all exports to the US, a move that signals a shift in global trade relations. This new wave of tariffs affects not only traditional trade partners like Canada, Mexico, and China but also poses a significant threat to the South African economy. As one of 60 countries labelled as ‘nations that treat us badly,’ South Africa faces some of the highest tariff rates under this new policy.

In addition to the high tariffs, Washington has specifically flagged South African laws and regulations including the controversial Expropriation Act and Public Procurement Act as barriers to US investment.

According to the US administration, these policies undermine competition, making it harder for American companies to operate and invest in South Africa.

Marking what Trump has termed "Liberation Day," the President claims this aggressive tariff strategy represents the rebirth of American industry. However, experts are already predicting that the impact of these tariffs will not be as straightforward as anticipated. deVere Group CEO Nigel Green forecasts that these measures will likely be rolled back within the next 6 to 12 months, as economic and political pressures mount both domestically and globally.

While the White House touts these tariffs as a means of strengthening US industry, their long-term effects may be damaging. Trade wars are notoriously difficult to resolve, and these tariffs threaten to disrupt global supply chains, inflate prices for US consumers, and create instability in crucial sectors such as automotive and agriculture.

China has already retaliated with its own tariffs, putting the US auto industry at risk and highlighting the broader economic repercussions. As inflation rises and consumer costs increase, there is growing concern that the political fallout from these tariffs could force Trump to rethink his approach.

The South African business community has expressed significant concern, particularly regarding the impact on exports in sectors like automotive manufacturing and wine production.

With market volatility on the rise and increasing hesitancy among business leaders, Green believes resistance to these policies will intensify, particularly regarding auto tariffs.

As the negative impacts of these policies become increasingly evident, it is not just possible but highly likely that a significant policy reversal will occur.

‍