Business Report

Rand weaker on Trump’s BRICS tariff threat

Nicola Mawson|Published

Trump warned that nations aligning with BRICS or adopting anti-American policies would face an extra 10% duty.

Image: Peter Zay / AFP

The rand weakened on Monday as markets digested renewed geopolitical risk sparked by US President Donald Trump’s latest move to target BRICS-aligned countries with additional tariffs.

Trump extended the deadline for new trade tariffs to August 1 and warned that nations aligning with BRICS or adopting anti-American policies would face an extra 10% duty. The fresh threat unsettled emerging markets and hit sentiment across global trading floors.

“Global markets opened the week on edge as President Trump reignited trade tensions ahead of the July 9 tariff deadline,” said Bianca Botes, director at Citadel Global. “While only Britain, China, and Vietnam have struck deals, a dozen nations are expected to receive tariff letters starting today.”

Currency strategist at TreasuryONE, Andre Cilliers, said the announcement put pressure on risk-sensitive currencies. “BRICS currencies, along with EM markets, have come under pressure this morning with the rand weakening.”

By mid-morning, the local unit had slipped to R17.71 to the dollar, from R17.50 last week Thursday.

South Africa’s political alignment is also in the spotlight. “South Africa-US relations remained strained with the introduction of the US-South Africa Bilateral Relations Review Act in Congress,” Cilliers noted. The legislation is set to examine South Africa’s foreign relations, particularly with China and Russia, as well as alleged human rights violations, he said.

Cilliers added that markets were also responding to a firmer dollar. “The dollar is trading firmer against the euro, pound, and yen as the extension of the tariff deadline results in higher uncertainty in markets.”

Expectations of a US interest rate cut have cooled somewhat after robust jobs data and sticky inflation figures. “The US monetary policy outlook is still quite clouded… although markets are still betting on a September cut,” said Cilliers.

Commodities also took a knock. Brent crude fell 0.35% to $68.05 per barrel after OPEC+ members increased output more than anticipated, Cilliers said. “Tariff uncertainty is also raising demand concerns and is likely to keep prices on the back foot,” he added.

Gold, often seen as a safe haven during times of uncertainty, also edged lower. It was trading at $3,310, down 0.7% from Friday, Cilliers said.

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