The Agricultural Business Chamber of South Africa (Agbiz) said that they expect an impact on the agricultural sector due to Trump’s tariff announcement. The Agricultural Business Chamber of South Africa said that they expect an impact on the agricultural sector due to Trump’s tariff announcement.File Picture : Tracey Adams/Independent Newspapers
Concern has been raised about the agricultural impact in South Africa following US President Donald Trump announcing across-the-board tariffs on Canada, Mexico, and China.
The Agricultural Business Chamber of South Africa (Agbiz) said on Monday that they expect an impact on the agricultural sector due to Trump’s tariff announcement.
Oxford Economics said that the latest set of tariffs will lead to weaker gross domestic product growth, higher unemployment, higher interest rates, and higher inflation this year in Canada, Mexico, and the US than in their January baseline forecast. “It will also cause us to raise our trade-weighted US dollar forecast.”
Oxford Economics said that to quantify the potential changes to the February baseline forecast, we leaned on our tariff scenario that included 10% tariffs on China and 25% blanket tariffs on Canada and Mexico. “Because of the lower 10% tariff for Canadian oil and energy and a less severe Canadian retaliation, the economic implications won’t be as severe as our prior scenario. We suspect that the announced tariffs won’t fully remain in place for an extended period.”
Agbiz chief economist Wandile Sihlobo said Trump has followed through with his election promise to impose tariffs on imports from Canada (25%), Mexico (25%), and China (10%). “In one sense, there is nothing unexpected about Trump's use of tariffs to pursue America's mercantilist objectives. Similar tariffs were deployed back in 2018, but that was against China, which Western countries had a silent consensus that it was a strategic rivalry. Now, with close allies such as Canada and Mexico, this takes trade frictions to shocking levels.”
Sihlobo added that if trade fragmentation and economic nationalism intensify, South Africa's agriculture and other exporting industries will be at risk. “The South African agricultural sector generated much of its growth over three decades through increased export opportunities. Roughly half of the produce in value terms goes to the export markets. For 2024, these exports likely exceeded the $14.0 billion (R264bn) mark for the first time.”
Sihlobo said higher commodity prices and strong fruit exports are mainly the drivers of South Africa's trade. “The actual figures we have so far are for 2023, where South Africa's agricultural exports reached a record $13.2bn, according to data from Trade Map.”
Sihlobo added that the EU, broader Africa, Middle East, and Asia are part of the large export markets. “In value terms, the Americas region was only 6% of South Africa's overall agricultural exports in 2023. Still, the region matters significantly.”
South Africa must focus on strengthening and revitalising relations with its trade partners beyond Europe.
Dranca Neo Phalatse, a Postgraduate Coordinator at the Faculty of Natural and Agricultural Sciences at the University of Pretoria, said that Trump’s announcement on tariffs could definitely have some ripple effects on South Africa’s agriculture industry. “If major economies face higher costs and trade restrictions, we might see shifts in global demand and pricing, which could impact our exports.”
Phalatse added that on the one hand, South Africa could find new opportunities to fill gaps in affected markets. “But on the other hand, increased global trade tensions and uncertainty could also make things tougher, especially if it leads to wider economic slowdowns or retaliatory measures. It’s a bit of a wait-and-see situation, but the overall impact will depend on how other countries respond and how long these policies stay in place.”
Jaco Minnaar, the president of Agri SA, said that he doesn’t expect a direct impact on South Africa from the trade tariffs. “I think the concern is trade uncertainty from the Trump administration on trade and tariffs. We can already see the impact with the Rand weakening against the US Dollar.”
Minnaar added that it's also concerning Trump's comment on the Expropriation Bill. “I think this could impact the Agoa trade agreement, and this could impact our agriculture industry and exports to America.”
BUSINESS REPORT