Donald Trump's tariffs could cost South Africa 100,000 jobs
Finance Minister Enoch Godongwana has warned that South Africa stands to lose more than 100,000 jobs if it fails to secure a renewed trade agreement with the United States
Image: Phando Jikelo / GCIS
Finance Minister Enoch Godongwana has warned that South Africa stands to lose around 100,000 jobs due to US tariffs if a trade deal is not renewed.
In an interview with Bloomberg Television, Godongwana said the country’s automotive sector, which exports heavily to the US, would be hardest hit because of the tariffs .
"We heard from the central bank governor saying, potentially, if the current deal, the current tariffs stay in place, 100,000 jobs could be at stake", Godongwana said.
Earlier this year, US President Donald Trump imposed a 25% tariff on all vehicles imported into the US and has since upped the ante on South Africa, informing President Cyril Ramaphosa last week that South Africa will be hit with a 30% tariff on all its exports to the United States from August 1.
This comes despite Ramaphosa’s recent efforts to preserve and strengthen trade ties with Washington, including discussions held at the White House earlier this year, aimed at resolving long-standing trade tensions.
Godongwana added that the stakes are high and the economic impact would be severe if a deal is not reached.
"My prayer, first and foremost, is that the deal should be made by August 1st. And secondly, if it's not made, it would be useful that we get an extension until we finalise the deal,” he added.
"Of course, the US has a huge economy. If we lose a trading partner such as the USA, it's going to have a major impact and create more unemployment in the economy.".
Minister of Agriculture John Steenhuisen earlier this year also conceded that the future of South Africa’s trade benefits under the African Growth and Opportunity Act (AGOA) remains uncertain, saying the government was “hoping for the best but preparing for the worst.”
"When we approached the subject of AGOA, it was made very clear that it is a creature of Congress and that we would have to engage with Congress, my personal view is that AGOA may still be on the boil but it is going to be different from the AGOA we know from the past," Steenhuisen said.
Business Leadership South Africa CEO Busisiwe Mavuso has also warned that if the trade deal is not renewed, the country’s economic momentum could be disrupted.
"Earlier this year, confidence was building - you could feel it in boardrooms and investment committee meetings. Then the global trade environment shifted dramatically," Mavuso said.
"The looming expiration of the current 10% tariff arrangement on July 9 could see South African exports to the US facing 30% tariffs, fundamentally altering trade flows and forcing rapid strategic adjustments".
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mthobisi.nozulela@iol.co.za