Why SA’s smartest move may be to hold fire on Trump’s trade war

6 Apr 2025

It would be rational for South Africa to wait and see how other nations react to Trump’s tariff shock before coming up with any kind of response that can’t later be dialled back.

The government’s public response to the tariffs instituted against South Africa by the Trump administration reveal just how difficult the situation is for our country. This kind of restrained and careful response is probably the only possible option, while our decision-makers may have to wait to see how the approaches of other countries fare with the Trump Administration.

There are many different ways to understand the decision by President Donald Trump to impose tariffs on all nations, and tariffs of 30% on us.

Standard Bank chief economist Goolam Ballim has suggested that it can be viewed as a “Brexit”, only instead of Britain leaving its trading relationship with the EU, the US is leaving its trading relationships with the entire world.

This means that many leaders around the world are now faced with the same problem, mainly because of the size of the US economy.

They both have to respond in the way that will best protect their economies, and they appear to their own constituencies as if they are responding.

In some democracies, this forces leaders to be incredibly robust. Canada’s election is being fought really on who will be tougher on Trump.

Mexico, with a relatively newly elected leader, and a weaker economy, doesn’t have the luxury that Canada does.

Meanwhile, China, which is not democratic, has responded with a blanket 34% tariff on all US goods.

China is able to do this simply because it can. And it may be hoping that simply through its announcement of tariffs, it can push US stock markets down so dramatically that Trump has no choice but to change course.

Our country is very different, we have fewer levers with which to respond.

As Trade, Industry and Competition Minister Parks Tau explained on Friday, 4 April, it would not be in the interests of our economy for our government to target the 600 US companies that have operations here.

He is, of course, correct. It would mean that South Africans lose jobs and antagonise Washington still further.

While Mineral and Petroleum Resources Minister Gwede Mantashe was derided when he first suggested that Africa as a whole should refuse to export its minerals to the US, that option is suddenly looking like one of the few feasible options.

But it would also cut off important sources of revenue for South Africans.

On Thursday, in the hours after Trump’s announcement last week, Tau suggested he was planning to travel to the US to try and negotiate a trade deal. Presumably, this would be aimed at removing some of the tariffs and instituting some kind of rules to our trading relationship.

But this could be fraught with danger too.

It is entirely possible that no one in the Trump administration will meet with him.

The next option could be for President Cyril Ramaphosa to go too, to show both the US and South Africans how seriously he is taking this problem.

But that too would be unwise.

It would seem there could be no meeting that Ramaphosa could take part in that would not be taken over by discussions about our case against Israel at the International Court of Justice.

Even normal photo-ops would be disrupted by Trump-supporting reporters spoiling for a fight over just that issue.

It is an indication of how Israel’s actions in Gaza divide the world that our government simply would not be able to get any substantive meetings in the US.

For Ramaphosa, all of this poses particular problems.

In the past he has generally been able to manage disputes and difficult political problems through following process and rules, and sometimes, personal engagement.

This time there is no process (even the World Trade Organisation currently is weaker than it should be), and no possibility of personal engagement.

Read more: Trump’s tariff teardown, the broken maths behind it and the global fallout

Read more: Tariff turmoil: South Africa opts for diplomacy over quick retaliation in trade dispute

Trump wants ‘no rules’

Also, Trump has made it clear he wants no rules, and that anyone he sees as weaker than him is a “loser”.

This is all part of his long-term plan, to amass as much power and wealth as possible for himself and his entourage.

It now seems likely that a massive international natural experiment is about to occur.

It seems that while different countries face very similar problems in responding to Trump, they are going to respond in a variety of ways.

Some of these will be more successful than others.

Thus it would be rational to wait and see what happens before coming up with any kind of response that can’t later be dialled back.

Also, these tariffs will have a huge impact on the US economy. At some point Trump might well be forced to change course.

That means it would be foolish to do anything on our part that could damage relations with the US permanently.

This may rule out approaches that may satisfy a domestic constituency (such as siding more closely with BRICS nations, or Russia, or Palestine).

But there is a clear need for more action from the government in other areas.

As many have pointed out, this is the perfect time for South Africa to take more of a leading role in encouraging more trade with other African countries.

We may find that we can use our presidency of the G20 to urgently create a new trading bloc that excludes the US. This should be much easier than it sounds, because so many countries have now lost the US as a market, and they too will be looking for partners to increase their trade with.

It will also lead to some difficulties.

For example, the EU is likely to have to forget about their criticisms of the anti-democratic actions of China’s government, simply to facilitate more trade. Something similar could happen to us too.

And, of course, it would be foolish to run from the arms of one bully in the US, to another bully, in the form of China.

Minister must rise to the occasion

It is clear that the Department of Trade, Investment and Competition will now become a priority for the government. It will need more capacity, more economists and analysts and more resources to improve the way it handles trade matters.

Crucially, Tau will have to rise to the occasion too. He will need to be seen to display leadership, both in explaining why South Africa is not hitting back against the US, and yet not appearing to be simply caving in.

In the meantime, our government will also have to see what other consequences there are.

Before Trump’s announcement the US bought around 8% of our exports, and already shipments of wine have been sent back. Oranges that were destined for California now have no buyer.

This could have strange effects. It is entirely possible that in the short-term the only possible consumer of these oranges is South Africa itself. Expect Woolies to have a cut-price special on citrus products soon.

And Old Mutual chief economist Johann Els has explained that the US tariffs are likely to lead to a recession there, and thus a weaker dollar.

As a result, the rand will be stronger against the dollar, which would result in lower inflation here, and that could allow the SA Reserve Bank to cut interest rates.

At the same time, the EU and China will now be forced to take action to grow their economies (and European countries are now spending a large amount of money on defence) so the global economy could start to grow in a significant way.

All of this means that for South Africa, the economic impact of Trump’s tariffs are much more complex than simply seeing them as negative.

This would also suggest that Tau and other leaders need to wait before taking any definitive action.

So aggressive and abrasive are the actions and comments of the Trump administration that it is tempting to demand immediate action from our government. Instead, it will probably be better to move carefully and slowly, and not do anything that could alienate the US permanently. DM

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South Africa

Trump wants ‘no rules’

Minister must rise to the occasion