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With Agoa uncertain, SA faces its biggest trade test yet

With Agoa uncertain, SA faces its biggest trade test yet
Yeshiel Panchia
By Yeshiel Panchia
2 Apr 2025
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Few expect the US’s Agoa preferential trade deal to continue, so what’s next for South African exports? 

With less than six months to go before the current term of the US’s African Growth and Opportunity Act (Agoa) expires, South Africa finds itself in the eye of a geopolitical storm as relations between the two countries worsen.

Once a symbol of Africa-US cooperation, even if imperfect, the preferential trade deal now hangs by a thread. Caught between diplomatic fallout, US politics and South Africa’s foreign policy choices, the country must prepare for a future without Agoa.

In 2022, South Africa exported goods worth R60-billion to the US under Agoa’s duty-free access agreement. This was about a quarter of all SA-US trade, according to the South African Revenue Service. The agreement supports hundreds of thousands of jobs in the automotive, agricultural and manufacturing sectors, among others.

Although Agoa is not the be-all and end-all of South Africa’s economy, as economist Dawie Roodt explained, in a difficult climate every bit counts. “It will be heavy on certain industries … but overall the impact won’t be that much,” he said. 

However, he added: “The economy is hardly growing and if you take 0.2% off, that’s a lot.”

The threat of exclusion is no longer hypothetical but appears to be imminent, though whether Agoa is discarded in its entirety or replaced with a new agreement remains to be seen. Either way, South Africa needs to be prepared.

“If Agoa ends, the stakes aren’t just economic – they’re existential for entire value chains,” said Ockert Berry, vice-president of operations at Ford Motor Company of Southern Africa. Locally, Ford employs 5,200 people directly and supports more than 60,000 jobs through its supply chain, he said. “If this happens to all the OEMs [original equipment manufacturers] in the country, I don’t know what the answer is.”

How did South Africa get here?


Agoa, enacted in 2000, was designed to boost African exports by granting duty-free access to the US market. For South Africa, it has had beneficial but not extraordinary results. Primarily, Agoa has underpinned growth in high-value exports such as vehicles, citrus, wine and some apparel.

But the geopolitical calculus has changed with Donald Trump’s ascendance to the US presidency for a second time, in part spurred on by waves of disinformation from both South Africa and the technocrats close to his inner circle such as Elon Musk, Peter Thiel and David Sacks, among others. 

In February, Trump announced an executive order triggering sanctions on South Africa, accusing Pretoria of undermining US strategic interests by siding with Russia and China. It was also retribution for South Africa lodging a case against Israel for genocide at the International Court of Justice.

The most immediate consequence was a flood of narrative conflict on social media, but the most important economic result is probably the loss of Agoa eligibility when the deal comes up for renewal in September.

This isn’t the first time the US has used trade as a political lever: the Reagan administration sanctioned apartheid South Africa in 1986. But it is the first time democratic South Africa faces economic punishment for its geopolitical positioning.

The hostile posturing from Washington may be reinforced by Trump’s nomination of Leo Brent Bozell III as the next US ambassador to South Africa.

Though not Breitbart News editor-at-large Joel Pollak, who has been vociferous in punting Trump’s arguments against South Africa, Bozell is not necessarily a more open-minded choice. A far-right, anti-liberal media activist with no diplomatic experience, Bozell is a signal of the Trump administration’s ideological posture: confrontational, transactional and unapologetically hardline in its dealings with South Africa.

Automotive and agricultural fallout


Few sectors illustrate the potential fallout as the automotive industry. In 2022, South Africa exported vehicles and parts worth R24-billion to the US – the lion’s share of its Agoa trade, according to Department of Trade, Industry and Competition data. With the loss of duty-free access, South African-built vehicles would face tariffs of up to 25%.

Although Ford in South Africa primarily exports vehicles to the European and Australasian markets, the company is US-owned, and Berry is blunt: “Agoa supports hundreds of thousands of jobs. Operators here earn as much as school teachers and support many people. You lose that, and you devastate families.”

Other OEMs, including BMW and Mercedes-Benz, face similar exposure. And although some exports can be redirected to Europe under the SADC-EU Economic Partnership Agreement, the US remains a critical diversification market. In total, more than 500,000 direct and indirect jobs are tied to Agoa-supported sectors, according to the National Association of Automobile Manufacturers of South Africa.

“The motor industry is in a bind, because it’s very difficult to take market share away from the other manufacturers,” Roodt said.

“The agricultural guys are a little bit better off and are frantically looking for other markets in the anticipation that they could lose Agoa.”

Nevertheless, citrus growers face a sharp squeeze. Citrus exports to the US totalled 110,415 tonnes in 2022, much of it from the Western and Eastern Cape. Without Agoa, these exports face a new 9 cents/kg tariff.

“We risk losing 35,000 jobs if Agoa ends,” Justin Chadwick, CEO of the Citrus Growers’ Association, warned earlier this year.

For farmers like Gerrit van der Merwe of ALG Estates, who is the association’s chairperson, the risk is existential. “That margin is the difference between survival and collapse,” he told Daily Maverick.

Other options


Alternatives exist, but none has the same scale or immediacy as Agoa. South Africa already exports the majority of its vehicles to the EU under the Economic Partnership Agreement. An agreement between the UK and the Southern African Customs Union (Sacu) offers a similar backstop. India and Sacu are in renewed negotiations too.

But tariff-free access, sanitary protocols and volume quotas all take time to renegotiate, and delay comes at a cost. Investors need certainty and workers need continuity and job security. Neither is guaranteed.

Roodt reckons the ramifications from the US might even increase. “I don’t think there’ll be a different agreement. We could get kicked off Agoa plus get additional levies against South Africa. We could eventually see financial sanctions.”

Intra-African trade under the African Continental Free Trade Area (AfCFTA) is the long-term horizon, offering the potential to expand regional markets and reduce reliance on external partners. However, its utility is limited by delayed implementation, poor transport and customs infrastructure, and a lack of harmonised standards in the member states. These bottlenecks mean that although the AfCFTA might support South Africa’s diversification in the future, it cannot offset Agoa losses in the near term.

Similarly, the Sacu-Mercosur Preferential Trade Agreement, signed between Sacu and South America’s leading trade bloc, remains narrow in scope. It covers a limited list of products and largely excludes South Africa’s high-value exports such as vehicles, machinery and advanced agro-processing. Usage of the agreement has been low and its benefits modest, leaving it insufficient as a serious substitute for Agoa.

Meanwhile, South Africa’s BRICS orientation comes with both benefit and risk – as does increasing its alignment. China is already South Africa’s top trade partner, but it offers no preferential access. India’s non-tariff barriers are formidable, and Russia offers ideological alignment but little in terms of market absorption.

Turning point or tipping point?


South Africa’s Agoa exclusion is no longer a remote scenario, but a stress test for its foreign policy, industrial strategy and ability to diversify both diplomatic and trade relationships under high threat.

The short-term impact will be severe for highly exposed industries, but the long-term response will define the nation’s global economic posture. The risk isn’t only lost exports; institutional confidence will suffer too. If investors, workers and allies regard South Africa as being adrift, recovery becomes a steeper climb.

Agoa might be going, but South Africa isn’t gone yet. How it responds will shape not just its trade outlook, but also its place in a world where US preference is no longer guaranteed. DM

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R35.



 

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