Of all of the sectors probably affected by US President Donald Trump’s newly imposed tariffs, agriculture is amongst these prone to be hit hardest, although analysts are nonetheless assessing the extent of the injury.
SA’s citrus and different key agricultural exports are in Washington’s crosshairs after the US abruptly introduced 30% reciprocal levies below a brand new international commerce regime, which President Donald Trump has dubbed the “Liberation Day” tariffs.
The transfer casts renewed uncertainty over the way forward for the African Development and Alternative Act (AGOA) and the competitiveness of SA’s burgeoning agricultural exports to the US.
Tariffs are sometimes calculated as a proportion of an imported product’s worth and paid by the importer when the products enter the nation. The first intention is to make imported merchandise costlier, thereby encouraging customers to purchase domestically produced alternate options. Whereas tariffs can shield native industries from overseas competitors, they’ll additionally result in greater costs for customers and strained commerce relations between international locations.
Paul Hardman, COO of the Citrus Growers’ Affiliation (CGA), mentioned the business was nonetheless figuring out the possible results of the announcement. Globally, SA is the second-biggest exporter of citrus.
“Citrus, in contrast to factory-produced merchandise, is a seasonal fruit,” he Hardman mentioned. “SA doesn’t compete with the citrus producers of the US. Actually, fairly the alternative — we maintain clients’ curiosity when their native citrus is out of season, benefiting US citrus growers in the long run. Each single 12 months, we ‘hand over’ consumers to our counterpart growers in locations comparable to California, Arizona and Texas.”
Hardman mentioned the tariff might inadvertently damage American customers. “Citrus additionally performs an necessary function within the nutritious diet of Individuals. Tariffs on seasonal recent produce can presumably enhance costs for the American shopper,” he mentioned.
SA exports about 9% of its citrus manufacturing to North America. “The American shopper has clearly developed a style for SA citrus — with exports almost doubling since 2017,” mentioned Hardman.
“We’re involved with our American counterparts to acquire as a lot clarification on the tariff announcement as attainable.”
Critical problem
Wandile Sihlobo, chief economist at business physique Agbiz, mentioned the US motion presents a severe problem for SA’s agriculture extra broadly.
“We’re but to obtain full particulars of how the tariffs introduced final night time will apply. It’s maybe extra prudent to work on the belief that the duty-free entry SA loved by way of Agoa might be over or, at greatest, can be restricted,” mentioned Sihlobo.
Sihlobo famous that the White Home cited what it sees as unreciprocated commerce imbalances as the idea for the brand new tariff construction.
“We additionally consider the 60% tariffs the US authorities argue SA imposes on the world aren’t primarily based on sound commerce calculations. SA’s common tariffs — on the [World Trade Organisation’s] Most Favoured Nations fee — common 7.4%, far decrease than the 60% the US argued SA levies,” he mentioned.
Subsequently, we consider the US thought-about commerce deficit and different elements of their calculations, not primarily tariffs SA and different nations impose on the US.”
Sihlobo added that whereas the US accounts for simply 4% of SA’s agricultural exports — valued at $13.7bn in 2024 — these exports had loved duty-free entry below Agoa.
“Within the present unsure setting, we are going to face a value competitiveness problem towards opponents comparable to Chile, Australia, and Brazil, which have tariffs of simply 10%. This can weigh on SA citrus, wine, grapes, fruit juices and nuts, amongst different merchandise.”
SA exports principally white wine to the US, Sihlobo mentioned.
He mentioned SA ought to search a extra everlasting answer. “We stay satisfied that SA ought to search a free-trade settlement with the US when the mud settles. A dependable, long-standing commerce association would serve the SA industries effectively.”
Kenya is engaged in such discussions and so they “have been levied far decrease tariffs of 10%.”
Sihlobo warned that uncertainty would persist for now. “For companies, the uncertainty will linger till there’s readability about product-specific tariffs, which is able to assist plan the brand new setting. Once more, the US authorities have but to speak the trail ahead for Agoa.”
marxj@businesslive.co.za
