SA government rejects tit-for-tat approach to Trump's steep trade tariffs

The government has announced its plans to counter the stiff retaliatory tariffs imposed on the country by US President Donald Trump but will not enter into a tit-for-tat battle with its second-largest trading partner.

Trade, Industry and Competition Minister Parks Tau on Friday urged caution over the Trump administration’s new tariffs.

Earlier this week, Trump slapped several countries across the world with tariffs ranging from 10% to 73%, and in South Africa’s case 31%, which will be effective from next Wednesday.

In response to the announcement, the government has detailed its plans to counter the tariffs and indicated that it needs clarity on the basis for the 31% to be implemented by the US when South Africa’s average tariff is 7.6%.

Tau and his International Relations and Co-operation counterpart Ronald Lamola promised that the country will continue to navigate the challenges and opportunities these measures present with resilience and innovation.

"South Africa will work to secure opportunities, in a context of a rapid withdrawal of favourable arrangements giving our exports preferential access to the US. This might involve securing additional exemptions and favourable quota agreements, ensuring our industries maintain critical access to the US market, including through sectoral co-operation," the ministers stated.

In addition, the government will intensify efforts to diversify export destinations, targeting markets across Africa as well as in Asia, Europe, the Middle East, and the Americas.

"This diversification supports South Africa’s industrial strategy and reduces dependency on single destination markets for our exports or single sources for our intermediate input requirements," Lamola said.

Tau admitted that agriculture and the Gqeberha and Buffalo City-based automotive industry will be disproportionately affected but the government is discussing plans to mitigate the impact of the tariffs on specific industries.

The government will also leverage the African Continental Free Trade Area to bolster intra-African trade and foster stronger regional economic integration and co-operation.

Tau said Trump’s tariffs were concerning to the government because the World Trade Organisation (WTO) dispute resolution mechanisms and their application were not complied with.

"At an international level, I think there is a general acknowledgement that there has been a disruption to the multilateral trading system, in reality, the systems of the WTO have not been considered in the application that was issued (by Trump) to trade,” he said.

Tau warned that this could lead to an environment where there are no global rules, where those of the strongest countries apply, and significantly disrupt trade worldwide.

"We have been saying before the announcement of April 2 (by Trump) and the announcements that took place earlier that there is a need for fundamental reform in the WTO and we will champion that at the G20 under our presidency of the G20,” he explained.

Department of Trade, Industry and Competition Deputy Director-General, Ambassador Xolelwa Mlumbi-Peter, said the tariffs applied to agriculture, manufacturing sectors, chemical, food, beverages, boats and shipping, equipment and machinery.

Exemptions have been granted to pharmaceuticals, wood articles, critical minerals, energy products, and copper while the reciprocal tariffs will not apply to products already facing the US’ section 232 tariffs of 25% such as steel, aluminium, automobiles and auto parts.

Mlumbi-Peter said the government was already undertaking an analysis of the impact of the tariffs and will implement targeted responses to assist industries to mitigate some of the impacts.

"A number of companies across the world will be looking at alternative markets, and we may see a lot of imports coming into South Africa," she said.

Mlumbi-Peter continued: "We do have instruments that are available to us to deal with surges with imports through the safeguards and the processes that International Trade Administration Commission implements and where there are cases of dumping where companies are reducing prices they charge in their domestic markets with the view to gain unfair advantage in terms of our markets we will be able to implement anti-dumping duties in those cases."

She added that there were trade defence instruments that are available under the WTO and under South African law that will allow the country to be able to protect its industries.

Mapungubwe Institute for Strategic Reflection senior associate, Professor Garth le Pere, said the US was very keen on marginalising South Africa and its security and strategic interests.

He said the empirical evidence showed that the US would not gain anything from imposing the reciprocal tariffs.

"Let’s just think through the illogic of this. Globalisation has opened the global economy to free trade and the free flow of goods and services. The global economy has really grown on the back of the ability of countries in a free and open global regime, it might be free but might not be fair. The US is really the architect of this opening up after which followed countries like China and other emerging powers and markets,” Le Pere explained.

He said what Trump is doing is to close up all these circuits with these unilateral and protectionist measures that are not reciprocal but damaging and draw 60 countries into the vortex of these punitive measures.

Le Pere suggested that South Africa should reconfigure its trading relationship with the US along the lines of a bilateral trade agreement.

"You are talking about a David vs. Goliath situation where the US, as the largest economy in the world, holds all the trump cards and they will try and draw as many concessions out of these agreements as possible," he added.

Trade union federation Cosatu expressed its deep concerns about the impact of the new tariffs on imports from across the world, including South Africa.

"We fear these new tariffs will spell the end of the African Growth and Opportunities Act (AGOA) that has helped to create and sustain millions of jobs across South Africa, Africa, and America and nurture the economic integration of the African continent,” Cosatu said.

Tau said the government would be represented at the AGOA Summit scheduled for later this year.

Meanwhile, US Republican lawmaker Ronny Jackson introduced the US-South Africa Bilateral Relations Act that calls for a full review of the bilateral relationship between the two countries and identifies the South African government officials and ANC leaders eligible for the imposition of sanctions.

Jackson cited South Africa’s relationship with China, Iran, and Russia as well as its support for Palestine as well as the International Court of Justice case accusing Israel of committing genocide against Palestinians.

loyiso.sidimba@inl.co.za