Having received confirmation that the 30% reciprocal tariffs imposed on South African exports by President Donald Trump have been paused, Trade, Industry and Competition Minister Parks Tau says South Africa is moving to finalise its “mutually beneficial” trade offer to the US.

Speaking on Radio 702, Tau said South Africa received confirmation from the US embassy that it had been removed from the reciprocal-tariff list, but that South African exports to the US would still face the 10% base tariffs announced by Trump on April 2.

In addition, the US has sustained the 25% tariffs imposed under Section 232 of the US Trade Expansion Act on all automotives, automotive components, as well as steel and aluminium imports, including those from South Africa.

Tau, who earlier warned that instituting retaliatory tariffs would be “counterproductive”, said that South Africa was now preparing to follow up through formal negotiations with the US.

He indicated that government was preparing to make a firm offer that took account of the US’s indication that it no longer favoured unilateral trade arrangements and was seeking “arrangements that go both ways”.

That stance, he indicated, posed difficulties for the African Growth and Opportunity Act (Agoa) that provided duty- and quota-free access to the US market for products produced by eligible African countries.

African trade ministers would meet in the Democratic Republic of Congo next week to deliberate on their response to that emerging reality ahead of the next round of Agoa discussions, which were scheduled to take place in June or July, ahead of a final review decision by the US Congress in September.

South Africa itself would seek to revive its Trade and Investment Facilitation Agreement with the US in a bid to “normalise relations”, Tau said.

In doing so, discussions would have to be broadened to cover prevailing political disagreements between the two countries, including the Trump Administration’s misgivings over South Africa’s land and black empowerment and international relations policies.

Tau gave the assurance to vulnerable sectors, including the automotive and agricultural industries, that the engagement would be oriented towards finding solutions and to tackling the uncertainty that made it difficult for business to make long-term investment decisions.

South Africa was also alive to the risk of collateral damage as a result of escalating trade tensions between China and America, which were the country’s two biggest trading partners.

The US has instituted tariffs of 125% on Chinese imports and China has retaliated with 84% tariffs on US imports.

Tau cautioned that exports from both countries could be redirected to new markets, which could harm domestic industries and increase competitive pressures in export markets, especially Africa.

SEIZE THE MOMENT

North West University Business School’s Professor Raymond Parsons noted the “careful and pragmatic approach” that had been adopted by government so far, and urged the authorities to seize the moment created by the pause “to broker a better tariff deal in its trade flows with the US”.

“For the automotive and agriculture sectors in particular there is much at stake for South Africa to use the 90-day period to seek to ameliorate the negative impact of high US tariffs on their exports to that country.

“South Africa’s negotiation stance should be based on the likelihood that Agoa will not be renewed.

“The probable pain of non-renewal or exclusion must be built into South Africa’s strategy,” Parsons added.

Tau had indicated previously that Trump’s tariff announcements had “nullified” Agoa and that a new bilateral solution was, thus, required.

The Minister had also questioned the basis for the 30% reciprocal tariffs and said South Africa would have to study the outcome given information showing that US imports faced South African tariffs of only 7.6%.

The Trump administration did not use tariff rates to set the reciprocal tariffs, but rather a formula that calculated a country's tariffs based on America’s trade deficit with each.

However, Professor Lawrence Edwards, of the University of Cape Town’s School of Economics, stated that the administration inflated South Africa’s trade surplus when applying the formula.

Its calculation, Edwards said, neglected to take account of any trade in services, where the US enjoys a sizeable surplus over South Africa, included gold processed in South Africa that did not originate in the country, and made no accommodation for exempted products, or exports covered under Section 232.

“In fact, if you account for exempted goods, account for the Section 232 goods, and you account for services, South Africa runs a trade deficit. In other words, we should have a zero, reciprocal tariff,” Edwards said during a recent webinar hosted by XA Global Advisors.