The Agricultural Business Chamber of South Africa (Agbiz) has expressed serious concerns regarding the nation's potential removal from the African Growth and Opportunity Act (Agoa).

The apprehension follows US President Donald Trump’s decision last month to end USAID to South Africa, igniting fears of an impending economic setback.

Wandile Sihlobo, chief economist of the Agbiz, on Thursday said the possibility of South Africa being expelled from Agoa would have a negative impact.

“Tariffs could average around 3% on exports to the United States, which would significantly hurt South Africa’s access to the American market, ultimately weakening its competitiveness,” he said.

Sihlobo added that there is growing international pressure and uncertainty surrounding the country’s trade relationship with the US.

“I remain hopeful that South Africa will still be part of Agoa when the agreement is up for renewal later this year,” he said.

“The US remains a vital role player for the country's exports despite only accounting for 4 %. The Agricultural Business Chamber of South Africa attributes this to the exports being concentrated to a few industries like citrus, grapes, wine and nuts.”

Further elucidating the potential ramifications, Waldo Krugell, an economics professor at North-West University, highlighted how the loss of tariff-free access to the US market would cause a decline in competitiveness among exports.

“While estimating the extent of this impact is challenging, any shift in tariffs will vary across industries. For instance, the automotive industry is particularly anxious, while sectors such as citrus may experience a lesser impact,” he said.

Krugell also noted the uncertainty surrounding Trump’s potential implementation of reciprocal tariffs, exacerbating fears within various sectors.

“The US tariff that we have to pay becomes whatever tariff we are levying on imports (and ours are generally higher). This will have a significant impact. But things can turn out differently if we are able to negotiate a new Free Trade Agreement with the US,” he said.

“Should these tariffs take effect, they would hinge on whatever tariffs we currently impose, many of which are already higher. This may severely alter our trade landscape unless negotiations for a new Free Trade Agreement with the US materialise.”

The situation is further compounded by the perception within the US of South Africa’s current political alignment.

Professor André Thomashausen, a Wits University Professor Emeritus of International Law, said there exists a consensus among American officials that South Africa might be denied future Agoa benefits, largely due to perceived political discord.

“The extent of this is difficult to determine. Up until now US tariffs have on average been low. If we have to start to pay them, the impact will differ by industry. The automotive industry is very worried, citrus a bit less,” he said.

Thomashausen added that if South Africa could afford to assist nations with struggling economies such as Cuba and lend credibility to groups like Hamas, then State support from the US may seem unnecessary.

“Then surely it does not need American dollars from the USA. With AGOA gone, South Africa will lose its main industrial manufacturing industry, the car assembly lines of the best known European and American brands. They will not and can not be "taken over" by Chinese automakers. In total, up to a million jobs will be lost, a very high price to pay for “struggle solidarity”.

Jaco Minnaar, president of Agri SA, noted that while only approximately 4% of South Africa’s agricultural output was exported to the US under the Agoa framework, industries that are more dependent, such as citrus, wine, and fruit, would be severely affected.

Although he expressed doubt that the expulsion from Ag would end exports altogether, he cautioned that potential import taxes could reduce profitability and lead to job losses in labour-intensive sectors.

“In a time when job creation is imperative for our economy, we cannot afford such losses, particularly in the automotive sector where the implications could drastically change long-term development plans,” Minnaar said.

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SA agricultural industry raises concerns if AGOA benefits are lost