Navigating the New Trade Terrain: What Tariff Shifts Mean for South African Business
This article first appeared in Business Day.
Brendan Robinson CA(SA) | Director, PKF Pretoria
In an era of intensifying global trade protectionism, the jury may still be out on the full extent of tariffs facing South Africa, but the warning signs are flashing. South African exporters and importers alike must prepare for a world where regulatory costs and complexity are rising – and where agility, data, and strategic foresight will define who wins and who falls behind.
From evolving US trade policy to domestic tariff reforms, South African companies are finding themselves in the crosshairs of significant shifts in global commerce. The good news? With the right approach, local industries can mitigate risk – and even unlock new competitive advantages.
Tariff Risk on the Rise: Eyes on the US
While a final decision has not yet been made, the United States is reviewing South Africa’s eligibility for duty-free access under trade agreements, such as the African Growth and Opportunity Act (AGOA). Political and policy developments could lead to punitive tariffs being imposed on a range of South African exports in the coming months. If implemented, these measures would impact sectors such as steel, aluminium, and potentially automotive components – all of which heavily depend on global market access.
There are nuances, however. Industries such as precious metals are not only exempt from proposed tariffs but are also currently benefiting from a surge in global demand and prices. The copper industry is another example – despite facing a proposed 50% tariff, strong global copper prices are acting as a buffer, aiding South African producers’ profitability in the short term.
For others, such as automotive players like Volkswagen South Africa, the exposure is limited. Their leading export destination is the European Union, not the US, highlighting the importance of diversified markets and tailored trade strategies.
Domestic Tariff Reform: Closing the Loopholes
Even closer to home, South Africa is making bold moves to protect its own industries, most notably textiles and apparel. Until recently, large online retailers like Temu and Shein took advantage of a 2007 concession that allowed them to pay a flat 20% duty on clothing imports with declared values under R500. These imports were also often mis declared or undervalued, giving foreign players a tax advantage over local retailers and manufacturers.
In a landmark change, SARS has moved to impose a more appropriate 45% import duty – in addition to 15% VAT – on these products. While full implementation was delayed due to the complexity of systems integration, interim measures are now in place. A simplified clearance process, aligned with the World Customs Organisation framework, was rolled out earlier this year to enhance compliance and enforcement.
This is more than just tax reform – it’s industrial strategy in action. By levelling the playing field, the government aims to support job creation, revitalise local manufacturing, and nudge consumers back toward South African-made goods.
The Road Ahead: How Businesses Should Respond
With both global and domestic tariff regimes in flux, the message to South African companies is clear: stay vigilant, stay agile.
- Understand Your Exposure: Companies must map out their supply chains and export markets to determine where tariff risks exist – and how they could escalate.
- Scenario Plan Around Policy Changes: From AGOA revisions to domestic tariff shifts, businesses must build flexible strategies that can withstand shocks or seize sudden openings.
- Engage With Regulators: Proactive engagement with SARS and customs bodies is essential to ensure compliance, advocate for fair treatment, and stay ahead of rule changes.
- Invest in Technology and Data: In retail, for example, local players will need to sharpen their e-commerce and pricing strategies as online giants adjust to new import costs. Digitisation and real-time data insights are no longer a luxury – they’re a business imperative.
- Reposition for Local Value: Whether you’re a manufacturer, exporter, or retailer, now is the time to double down on localisation, build consumer trust, and promote South African quality.
Turning Challenge Into Competitive Edge
Tariffs and trade policy are no longer the domain of policy wonks alone – they are now boardroom issues. South African companies must view this evolving landscape not as a threat, but as an opportunity to modernise, innovate, and take control of their competitive futures.
In a world of shifting rules, it’s not just about avoiding penalties – it’s about positioning your business for long-term resilience and relevance.