Play, pause and punishment — Trump’s tariff doctrine and South Africa’s hedged bets

10 Apr 2025

Donald Trump’s 90-day pause on sweeping new tariffs may have calmed markets momentarily — but for South Africa, it’s a fleeting reprieve in a new era of global economic coercion. At stake: Agoa access, domestic price stability, and the fundamental assumption that open markets remain open.

On Wednesday, 9 April 2025, US President Donald Trump announced the temporary suspension of new tariffs, including the threatened 30% duty on South African exports. The move briefly steadied the rand, which had slipped nearly 4% over the previous week. While the reversal appeared confusing — and has been widely attributed to bond market turmoil — it reflects a deeper, though not necessarily sound logic in how Trump’s advisers view tariffs: as fiscal and geopolitical instruments to reshape relationships he considers one sided.

A blanket 10% tariff on most US imports remains in place, including on South African goods previously zero-rated under Agoa (the African Growth and Opportunities Act). This has effectively nullified Agoa’s benefits in practice, especially for agriculture and auto exports. Steel and aluminium duties also remain intact, and Agoa appears increasingly unlikely to be renewed — and the window for renegotiation is narrowing.

Strategy or amateur hour?

Some analysts suggest that Trump’s brashness masks a more deliberate agenda, echoing the mulled thoughts we all had around some of Jacob Zuma’s actions, with the alleged brainchild of the strategy being one Stephen Miran.

Miran, a Trump-aligned economic adviser and former US Treasury official, outlined the framework in a paper published in November 2024, titled “A User’s Guide to Restructuring the Global Trading System”. “Tariffs are not acts of aggression; they are fiscal tools,” he argues, calling them instruments of strategic realignment aimed at correcting decades of global trade imbalance driven by US overextension.

While Miran provides a philosophical justification, others argue that Trump’s actions are impulsive and unmoored from coherent strategy — and these arguments appear more cogent than the idea of a grand Trumpian economic plan, given the impact that much of his actions have on the US consumer.

“I don’t think Trump’s tariffs reflect any strategic shift,” says Izak Odendaal, Chief Investment Strategist at Old Mutual to Daily Maverick. “It is quite clear to me that he wants tariffs because he likes the idea of tariffs. His advisers have their own big strategic plans and papers and so on, but who knows whether Trump listens to them. This whole episode has been amateur hour.”

Odendaal believes the tariff reversal was reactive, not strategic. “I think Trump backtracked because markets were tanking, particularly the bond market — if you will, it is the ‘bond vigilantes’ that restrained him.”

Not knowing whether there is a deeper strategy behind Trump’s actions or whether he is simply acting in accordance with his apparent demeanour has introduced the one thing that markets famously dislike: uncertainty.

As Martin Whetton, head of financial markets strategy at Westpac told Reuters this week: “The world, political and financial is looking on with horror, not bemusement, at an administration that prioritises the signing of an executive order for more water power in shower heads, on the same day that the bond market breaks and investors question the long-term credibility of the administration having flip flopped on the largest of their policies, tariffs.”

A world rebalanced, or upended?

Economist Dawie Roodt offers a more structural perspective — arguing that the US debt burden is now so severe that tariffs may be viewed as an alternative to politically unpopular tax hikes.

“Debt levels in the US are becoming dangerously high,” Roodt says. “Tariffs become a revenue tool dressed as strategy.”

But in attempting to rebalance the system, Trump may undermine the very architecture that underpins US economic dominance.

“In order to maintain the dollar’s reserve status, the Americans must keep on importing more from the rest of the world than what they export,” says Roodt. “If you disrupt that, you could undermine the dollar.”

Miran’s framework proposes exactly that disruption — a recalibration away from what he calls the “Triffin trap”, where the US supplies capital to the world at the cost of domestic industrial decline, but Roodt sees risk in this approach: “This is not 2008. It’s not 1971. It’s something else. The genie’s out of the bottle — and we can’t go back to yesterday.”

Not all tariffs are created equal

The US remains South Africa’s second-largest export market, absorbing more than R150-billion in goods annually, from citrus to automotive components. Yet Pretoria’s alignment with BRICS and its ambivalent stance on US foreign policy priorities continue to be cited as straining bilateral ties — placing Agoa renewal, and preferential market access, in jeopardy.

This narrative also places the entire burden of the responsibility of the bilateral relations on South Africa and none on the US, which under Trump is wielding foreign economic policy as a hammer to relationships, including with South Africa.

The African Growth and Opportunity Act, which enables duty-free access for a wide range of South African exports, is set to expire in September 2025 — and efforts at renewal are increasingly looking dim.

Under Trump’s doctrine, open market access is no longer unconditional — instead, it must align with US security interests and reciprocal trade behaviour.

“What happens next is anyone’s guess, but I’m hoping that Trump steps away from the extreme tariffs imposed last week, and sticks to either the flat across-the-board 10% tariff, or genuine reciprocal tariffs,” said Odendaal.

South African exports increasingly exposed

South African exporters in vulnerable sectors — notably citrus, automotive, and textiles — face a volatile planning environment. For industries reliant on Agoa preferences, even temporary relief offers little long-term assurance. Meanwhile, the rand’s brief rally may fade if geopolitical tensions re-escalate or tariff threats return. With China now facing 125% tariffs of its own, a slowdown in Chinese growth could reduce demand for South African exports even further, placing already uncertain sectors in South Africa at greater risk.

Rand relief not likely to last

The real economic risk appears to be complacency and expecting predictability in US economic policy. While the 90-day pause offers a window for engagement, it also creates false comfort. Trump’s prior use of tariffs as diplomatic leverage — often with little warning — has conditioned trade partners to expect reversals. South Africa’s reliance on the US market, absent diversification or contingency planning, may leave it exposed when the pause lapses.

“The rand helps us. It has lost 5% this month, so if the tariff stays at 10%, the effective tariff increase is only 5% — not too damaging,” said Odendaal. “The inflationary impact is limited by the fact that the oil price is much lower, and also because I would expect global goods price inflation to moderate. Since China basically cannot export to the US any more, those goods will be redirected to the rest of the world.”

Roodt added that South Africa’s vulnerability was compounded by its reliance on dollar-denominated capital flows.

“We’re a small, open economy, heavily dependent on capital inflows and commodity exports,” he said. “We are exposed to things going wrong internationally.”

Strategy or simple chaos?

Even within the US administration, there is no cohesive vision for tariff policy. Daniel Silke, a political and economic analyst, points to internal Republican divisions and a reactive trade posture.

“There is no coherent plan. The tariff freeze is less about strategy and more about market damage control,” he said to Daily Maverick, concurring with Odendaal.

Silke emphasises that tariff diplomacy alone won’t protect South Africa’s economy. The real threat, he argues, is domestic.

“We’ve got to get our own act in order,” he said. “The real issue is the lack of South African policy certainty and our own domestic instability. That’s what’s really hurting the rand.”

Like the US push to restore domestic production, Silke calls for a local industrial reset: easing labour regulations, lowering input costs, and supporting manufacturing competitiveness.

“This is a time to reflect on a restructuring of the productive capacity of our own economy. It’s not just about surviving tariff threats — it’s about ensuring we’re less vulnerable to them in the first place.”

Roodt agrees.

“The best approach for us is sensible macroeconomic policies and supply side reforms. Government’s borrowing costs have increased in recent days, so fiscal discipline is more important than before… then we must push ahead with the steps under way to raise private sector investment in rail, ports and energy. We must fix our infrastructure. It is getting the basics right, in other words.”

While these actions might make South African manufacturing and production more alluring to global markets in the uncertain times to come, deregulation of labour and other actions to reduce input costs are going to be borne by our already economically unequal population — with the real cost being charged to our citizens who can least afford it.

The broader lesson is strategic: access to global markets can no longer be assumed in a world of transactional trade diplomacy.

The tariff coming for your trolley

For South African consumers, the consequences are tangible. Should (or when) Agoa expires or tariffs return, producers may face suppressed margins, job losses and lower output. A weaker rand — already a recurring theme — would inflate the cost of imported fuel, fertiliser, electronics, and food. Inflation, interest rates, and household debt burdens would probably follow.

In other words, the price of everything goes up.

A tariff pause may seem like a distant foreign policy move. But in a globalised economy, it echoes through grocery bills in Gauteng, pay slips in Gqeberha, and bond repayments in Cape Town.

Whether we are able to respond with foresight or inertia in the next 90 days may define the shape of our country’s economic resilience — and the affordability of life for millions.

And as Roodt succinctly said: “We just don’t know what’s happening… and that’s the real risk. It’s not knowing.” DM

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