The following is the transcript of a podcast by economist Wandile Sihlobo broadcast by Financial Mail, edited by Eamonn Ryan. This is Part 1 of a two-part series.
South Africa’s agribusiness sector had entered 2025 with a palpable sense of optimism, fueled by favourable production conditions across various agricultural commodities and the anticipated recovery of key export markets. This positive sentiment was reflected in the Agbiz/IDC Agribusiness Confidence Index, which surged by an impressive 11 points from the close of 2024, reaching a high of 70 points – the highest level seen since the final quarter of 2021.
However, this bright outlook has been somewhat tempered by emerging challenges. While the livestock industry anticipated regaining export traction, recent reports of foot and mouth disease outbreaks in KwaZulu-Natal and parts of the Eastern Cape have introduced a note of caution.
Although authorities are working to contain the spread, the situation remains a potential risk that is being closely monitored.
More significantly, the optimism has been dented by the recent announcement from the US of reciprocal tariffs, implemented on what was described as ‘Liberation Day’. These tariffs, ranging from 10% to a substantial 31%, are set to impact approximately 4% of South Africa’s USD13.7-billion agricultural exports recorded in 2024. Key affected sectors include some which are vital to the cold chain: citrus, grapes, wine and fruit juices, representing a significant monetary value of just under half a billion US dollars.
It is now known that a baseline tariff of 10% will apply to imports from all countries. It remains unclear whether there are differences in the remaining 21% duties levied against South Africa.
It is prudent to assume that South Africa will be out of the African Growth & Opportunity Act (AGOA), which afforded the nation duty-free access to the US for a range of products, including from the auto industry and agriculture.
It is suspected there may be some differences product by product, but that will only become clear when the US authorities release more information. It is known that the reciprocal tariffs will generally range from 10% to 60% (and to 31% in the case of South Africa). The exact levy will be based on what the White House Council of Economic Advisers thinks is the sum of tariffs and non-tariff barriers on US goods to a specific country.
Indeed, some products face higher tariffs in the South African market, but there are rebates through the International Trade Administration Commission of South Africa to assist any country that requires relief. South Africa is one of the countries with the lowest tariffs, which some local stakeholders have previously argued was a policy mistake when South Africa rejoined the global economy after 1994, following years of isolation.