US tariffs don’t just hit exports, they hit South Africa’s digital future

On July 7, 2025, the President of the United States Donald Trump issued a formal letter to President Cyril Ramaphosa announcing a 30% tariff on all South African goods and products entering the US. This decision, he claims, is in response to “persistent trade deficits” and South Africa’s own tariff and non-tariff barriers.

While the tariffs are not limited to the tech sector, their implications for the South African digital economy, SMMEs, and ICT service providers are especially severe. This is a sector built on fragile margins, export driven business models, and global digital dependencies. The 30% tariff, and the separate 10% tariff on companies aligned with BRICS, threatens to undo years of slow, hard-earned progress in transforming South Africa into a digital player on the continent.

So, what exactly are these tariffs, and how do they affect us?

A tariff is a tax imposed on imported goods. Beginning August 1, 2025, every product or service originating from South Africa and landing in the US will be slapped with a 30% surcharge. The letter makes it clear: this is not limited to specific sectors or industries, it’s a blanket economic action.

Here’s where it matters most for us: South Africa’s tech exports, whether software services, BPO, data management, or hardware components, are deeply integrated with American clients, platforms, and infrastructure. When you add 30% to the cost of doing business, you price our companies out of the market.

SMMEs that rely on US partnerships or exports are already asking, “Will our clients still afford us? Will our services survive this margin cut?

”What does this mean for our digital start-ups and locally owned tech firms?

It means turbulence. It means potential job losses, stalled expansion, and cancelled deals.

Many start-ups have clients or funding ties in the US, from accelerators like Y Combinator to data hosting agreements with AWS or Microsoft Azure.

The new tariffs also open the door for non-tariff retaliation, tighter scrutiny of South African firms, delays in approvals, or exclusion from US- based tech tenders and developer platforms.

Meanwhile, if a South African tech firm decides to relocate manufacturing or service delivery to the US, the letter promises “zero tariffs.” That’s not an olive branch, it’s a strategic lure aimed at hollowing out our local industry.

This puts locally owned ISPs, fintechs, health techs and edtechs in a double bind: either absorb costs they can’t afford or uproot themselves from the very economy they were built to serve.

Is this just about tech, or is it bigger?

It’s much bigger, but tech is where the economic damage will be most disproportionate. This is because tech and digital services aren’t physically shipped, they are rendered through  cloud, code, and cross-border contracts. They rely on speed, price competitiveness, and seamless integration with global networks. All of that becomes fragile when tariffs and trade tensions enter the equation.

Moreover, tech is one of South Africa’s most promising exports, especially in areas like fintech, AI, cybersecurity, and e-learning. These are the industries that were meant to help us leapfrog development gaps. Now they are under threat.

How does this tie into BRICS, and why is there a separate 10% tariff for us?

This is geopolitical. The United States is making it clear: countries working with BRICS to build alternative digital systems, like cloud infrastructure, data governance, and financial rails, will be penalised.

South Africa, as a BRICS member, has pushed for multipolar digital platforms, many built with Chinese or Russian technology. The US sees this as economic rebellion. The 10% BRICS tariff is a signal to all BRICS-aligned digital actors: play by US rules, or pay a premium.

Can we survive without the US tech ecosystem?

It’s a hard question, and the answer today is no, but it doesn’t have to stay that way. South Africa is still deeply dependent on US software licensing, app stores, payment gateways, and developer tools. But this tariff moment should force a conversation about resilience, localisation, and self-reliance. This is a call to action, not retreat.

What should South Africa do now?

1. Declare digital infrastructure and platforms as strategic assets: Prioritise localisation of cloud, hosting, and digital payments infrastructure. Build local alternatives to ensure data sovereignty and reduce exposure to foreign policies.

2. Create a Digital Tariff Relief Programme: Support affected SMMEs and export-focused tech firms with rebates, bridging capital, and subsidised access to alternative markets.

3. Fast-track BRICS aligned infrastructure and trade systems: Invest in BRICS-wide alternatives like cross-border payment platforms, shared AI resources, and independent undersea cable capacity.

4. Negotiate bilateral tech trade corridors in Africa and Asia: Within the African Continental Free Trade Area (AfCFTA), create a digital trade zone that protects African firms from unilateral external tariffs.

5. Mobilise the local private sector: Encourage big corporates, banks, and universities to procure locally-built software and platforms, creating a safety net for firms hit by external restrictions.

The battle is no longer about trade, it’s about control.

The 30% tariff is not just a tax, it’s an ultimatum. It says: “Build with us or pay the price.”South Africa should not allow itself to be economically strong-armed. We must now decide: do we fold under pressure, or do we double down on building a digitally sovereign, globally respected, locally grounded ecosystem?The future will belong to those who control their code, their cables, their clouds, and their destiny. The time to build is now.

Luvo Grey, Secretary General of the Progressive Blacks in ICT. He writes in his personal capacity

*** The views expressed here do not necessarily represent those of Independent Media or IOL.

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