Read more
Although SA benefits from a 90-day tariff pause, experts say it’s a tactical move by the US to secure favourable trade agreements.
Workers at the Nien Hsing International Garment’s Factory produce Levi jeans for the US market in Maseru, Lesotho yesterday. Lesotho was initially subject to a 50% trade tariff imposed by the US. However, in line with most countries except China, the tariff has been reduced to 10% for a 90-day period. Picture: EPA-EFE
While South Africa has seemingly gained some respite from US President Donald Trump’s punitive tariffs, which dropped from 31% to 10%, analysts cautioned against any celebration.
They said the US government planned to use the 90-day pause period to lock countries into negotiations aimed at gaining favourable trade deals for America.
During an interview on 702 on the tariffs crisis yesterday, Trade, Industry and Competition Minister Parks Tau confirmed South Africa has been included in the 10% list of countries in the 90-day pause period.
SA included in 90-day tarrif pause period
Unlike China, SA has resolved not to adopt a retaliatory stance in response to the US tariffs.
“We’ve received a note about the decisions that were made yesterday and our team did have interface with the US embassy yesterday with regards to the overall engagements with the US,” said Tau during the radio interview.
ALSO READ: Trump’s tariffs pause good news but not that good either for SA
He said the US sought to achieve “a mutually beneficial” arrangement during negotiations.
“They have seen that the tariffs and trade structures have been disproportionately skewed in our favour and would want to have a discussion around that,” he said.
“We have already started raising with the US the need to revive trade and investment facilitation agreements which we had, so that we are able to normalise issues about trade between the two countries.”
25% automobiles, steel, aluminium tariffs unchanged
However, there has been no change to the blanket 25% tariff announced by Trump under Section 232 of the US Trade Expansion Act on all automobiles, automotive components, as well as steel and aluminium imports, including those from South Africa.
University of Johannesburg economics lecturer Dr Frederich Kirsten and independent political analyst Sandile Swana said Trump planned to leverage on the tariffs as a tactic for favourable US trade deals with other countries.
ALSO READ: Rand reaches record low on Wednesday, trading at R19.93/dollar
“What is clear is that the Trump administration used the tariffs as a negotiating tool. The US now has a lot of negotiating power, given the pausing of the tariffs for 90 days,” said Kirsten.
“[The US] can now start making trade deals – pushing their agenda. Tariffs have created a negotiating tactic for the US.”
Slamming a perception that the 10% tariff, constituted a respite, Swana said: “There is no relief whatsoever, because what Trump is doing is changing the standards of the World Trade Organisation, the United Nations and any other universally-accepted prescripts governing international relations.
‘No relief’
“Every programme, will be governed by US standards and at the will of America.
“When you go to do business with the US, your country becomes an American state – their satellite.
ALSO READ: Trump tariffs implemented in same week SA citrus growers pack for US export
“The life your people are going to live in terms of products and what they consume, is going to be similar to that of Americans.”
He said there were “a number of items, which Trump would like to negotiate with SA – listed in the Bill for the review of bilateral relations between the two countries”.
“If goods from America have to meet SA standards – in line with the SA Bureau of Standards, health standards and B-BBEE [broad-based black economic empowerment] in terms of trade – Trump wants you to remove any of that, for smooth trading.
Items Trumps wants to negotiate on
“Nothing should hinder or delay trade between America and SA,” said Swana.
South Africa, he said, would be squeezed to import food and other products from the US “recklessly, disregarding environmental and health concerns”.
ALSO READ: Trump’s tariffs risk triggering global financial collapse
Union federation Cosatu said government needs to engage the US government “on a new mutually beneficial trade agreement, due to 500 000 South African jobs linked to US investors and SA companies exporting to America”.
While describing the suspension of the original 31% tariffs during the 90-day period as “positive”, Cosatu national spokesperson Matthew Parks said the 10% on agricultural goods was “still hefty”.
“This is especially when considering SA’s duties on US goods averages at less than that at 7.4%, with some goods exempted,” said Parks.
10 on agricultural goods ‘still hefty’
“Vehicle exports, which are a large part of SA exports to the US, remain at 25%, which would make it very difficult for those exports to remain competitive.
“This threatens thousands of South African jobs. When we have a 41% unemployment and 1% [gross domestic product] growth rates, we don’t have space to bleed further.”
NOW READ: Trump’s retreat opens the door for China’s growing influence in Africa
Download our app
