JOHANNESBURG, July 31 (Xinhua) -- New U.S. tariffs on South African exports will likely hurt the country's export competitiveness, strain key industries and weigh on already modest economic growth, a local economist has said.
In a recent interview with Xinhua, Simphiwe Madikizela, professor of economics at the University of South Africa, said any trade barrier is unwelcome given that the country's economic growth remained modest.
The United States imposed a fresh round of 12.5 percent tariffs on selected South African exports under Section 301 on July 24, amid deteriorating bilateral relations under the Trump administration over Pretoria's case against Israel at the International Court of Justice and disagreements on domestic and foreign policy.
Madikizela said the impact will vary across sectors, but exporters will generally face reduced price competitiveness, lower profit margins and potentially declining export volumes. He identified agriculture and manufacturing as the hardest-hit sectors, given South Africa's heavy reliance on exports of citrus, wine, nuts and automotive components.
"Companies operating on thin margins may be forced to absorb part of the tariff costs, while others may pass these costs on to buyers, risking a loss of market share to competitors from countries not facing similar tariffs," he said.
The latest measures follow the 30 percent tariffs imposed by the United States last August, which have already disrupted supply chains and affected export-oriented businesses, Madikizela noted. He said the overall economic impact will depend largely on how long the tariffs remain in place.
From a macroeconomic perspective, weaker export earnings could pressure South Africa's trade balance and the rand if export volumes decline materially, he said, adding that "lower exports would also weigh on manufacturing output and GDP (gross domestic product) growth, particularly if businesses delay expansion or reduce production."
He raised questions about the predictability of bilateral trade relations, noting that despite South Africa's extensive engagement with the United States, it has still faced additional tariffs. ■