Photo by Markus Winkler on Unsplash
While some voices are calling for a furious response to the imposition of 30% tariffs on South Africa by the US, President Ramaphosa’s government has chosen a path of disciplined negotiation, an encouraging signal that South Africa is prepared to manage this new, complex reality with resilience and character.
In the high-stakes chess match of global trade, South Africa is not playing for soundbites. It is playing for sovereignty. And this should give all of us cause for hope. In a changing world, where the old rules of diplomacy no longer apply, we’re facing our toughest challenge yet – both politically and economically.
It’s a pivotal moment and an opportunity, perhaps, to look inward and build resilience. The stakes could not be higher. Early estimates suggest that the new 30% tariffs could put up to 100,000 jobs at risk, with the automotive and agricultural sectors particularly vulnerable. In the Eastern Cape, a core industrial hub, the automotive sector's export earnings have already plummeted by over 80% in the wake of the initial tariff announcements.
Similarly, the agricultural sector, which employs a significant number of low-skilled workers, faces the devastation of its citrus, wine, and macadamia nut industries. These are not just abstract economic figures; they represent entire communities and towns whose livelihoods are in jeopardy. The country, therefore, has to walk a very fine line.
On one side lies the risk of alienating a key trading partner and long-time ally. On the other hand, there is pressure to maintain a sovereign foreign policy that may not always align with US interests. The nation’s response is a signal to the world that it will not compromise its people’s interests. Retaliation without leverage is just theatre, and a combative stance would be strategically myopic. Our economic ties with the US run deep. Not only is the US a great and diverse nation and a major export market for us, but 600 American companies operate in South Africa, many using it as a base for broader regional operations.
The goal, therefore, needs to be to forge a mutually beneficial trade agreement while simultaneously cushioning local markets from shocks through pragmatic economic policy. So far, this has included setting up an Export Support Desk for affected businesses to help them find alternative markets and exploring a "block exemption" from competition rules to allow companies to collaborate and coordinate their export efforts.
Further opportunity lies in doubling down on exporting more value-added goods, forging new alliances, and accelerating intra-African trade. We can look to diversify trading partners by targeting markets in Asia, the Middle East, and actively pursuing initiatives like the African Continental Free Trade Area (AfCFTA), a project that positions South Africa not just as a supplier of raw materials to the rest of the world, but as a strategic hub for a continental economy.
The private sector, alongside the government, can also embrace a strategic approach premised on building resilience. As a starting point, firms can look to getting the basics right, managing margins and creating value. In the longer term, embracing the Post-COVID shift in thinking on supply chains from a "just in time" to a "just in case" mindset holds true in this current economic crisis. This means diversifying sourcing beyond a single country and investing in digital solutions for real-time visibility. By focusing on moving up the value chain – from exporting raw materials to producing high-value, finished goods – businesses can also seek to make themselves less vulnerable to tariffs and more competitive globally. We should bear in mind that, as other nations around the world are in a similar situation, they may be actively looking for new sources of goods and services, and potentially, South African businesses can rise to meet this new demand.
None of this will happen overnight. This is a deliberate, long-term strategy built on firmness and calm clarity, not aggression, and it requires a steadfast diplomatic position and pragmatic economic strategy – and patience.
We also have to accept that it will almost certainly involve short-term pain. Businesses will have to make difficult choices, absorbing higher costs and lost revenue as they reconfigure their supply chains and retarget their exports. Jobs will be lost, and for ordinary South Africans, the cost of food, transport, and household essentials could keep rising faster than salaries, eroding purchasing power. But the question to ask ourselves is, is that pain likely to be worse than the perpetual threat of future capitulation?
This is not passive acceptance or being bullied, as some have claimed; it is a calculated decision to engage with respect and fairness to protect jobs and industries, absorbing short-term pain for long-term sovereignty. It is, in fact, the very essence of diplomacy.
The true strength of a nation is not measured by its capacity for outrage but by its ability to act with character in the face of adversity. South Africa has what the world needs: a growing, talented population and vast mineral wealth. We have the capability and character to thrive when we stop trying to measure ourselves against the West and start to exercise the strength we already possess. This is a time for leaders and businesses to stand firm with calm clarity, trusting that we have more leverage than we think.
Ultimately, this crisis can either crush South Africa or catalyse a new era of strategic action. By focusing on reasoned negotiation, building resilience, and believing in our own strength, we can choose the latter.
Jon Foster-Pedley is Associate Pro Vice-Chancellor (Global Engagement, Sub-Saharan Africa) at the University of Reading, UK, and Dean of Henley Business School Africa.
This article was originally published in Business Day