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The 30% tariff hike: SA must strengthen diplomatic ties, diversify trade partnerships beyond the US

07 April 2025 Photo Supplied

Opinion article by Dr Calvin Mudzingiri, Assistant Dean: Economic and Management Sciences, University of the Free State, Qwaqwa Campus

The sudden hike of import tariffs by US President Donald Trump and his administration to countries across the world is set to reduce the volume of goods traded and affect citizen welfare across the globe. The Trump administration implemented a global 10% import tariff and a varying targeted reciprocal tariff to a host of countries, including South Africa. The reciprocal import tariff to be levied on South African export goods to the US is set at 30%. Historical data show that yearly trade between SA and US amounts to $23 billion and the US is SA’s the second biggest trading partner after China. The high tariff will reduce the competitiveness of South African export goods to American markets, leading to reduced demand of SA exports in US markets, low income to firms, job losses, low income to households and ultimately lower South African economic growth.

SA and US trade

South Africa exports platinum, locally assembled cars, raw aluminium, ferroalloys and agriculture products, among other goods, to the US. The implication of the US administration’s 30% tariff hike could result in job losses in the mining, automobile, agriculture and many other industries. More income losses to SA agricultural exports can also be experienced if the African Growth Opportunity Act (AGOA) expires in September 2025, if the US congressmen decide not to renew the agreement. Given the low economic growth rate in South Africa in 2024, which is estimated at 0.6%, the tariff hike by the US will exacerbate sluggish economic growth and recovery from the COVID 19 pandemic.

Statistics also show that SA imports energy products, machinery, vehicle, industrial and other consumer goods. The goods and services SA imports from the US play a critical role in developing and sustaining local industry. SA can decide to source the goods from other markets and if this happens with all economies where tariffs were imposed, the US will be worse off. There is a possibility that economies which received a tariff hike from the US will implement a reciprocal tariff hike to the US reducing the volume of global trade. The reduced trade volumes have dire implications for job creation, income generation by firms and households, making citizens worse off.

US current trade policy

It is important to note that President Trump administration’s trade policies are premised on a trade notion synonymous to ‘mercantilism’, which was practised in Europe between the 16th to 18th centuries. Under mercantilism, an economy aims to maintain a trade surplus, the government regulate the economy, discourage imports (in the case of the US using tariff hikes) and promote growth of home industries among other initiatives. Conventional economics wisdom has proved that policies pursued by the Trump administration of protectionism are a breeding ground for trade wars. There is great potential of fellow trading partners retaliating and if that happens, global citizens will be made worse off as they will be forced to pay high prices for goods due to additional costs driven by tariff hikes. In addition, US industry relies on raw materials from other countries. If the suppliers of raw material resources retaliate, the production cost model of US firms will rise, reducing export competitiveness of US exports.

Trump’s administration is calling for firms across the world to move and produce goods in the US to avoid tariff levies. The action works against the benefits of free trade and can affect firms’ comparative advantages. The production cost structure in the US can be higher than in other countries leading to firms realising low profits if they move to the US. It is essential to note that free trade with absolutely no trade barriers will enhance the welfare of citizens at large, since goods and services will be purchased at low prices. The US government’s act of over-regulating trade can limit economic growth not only of other countries but even that of the US economy.

Options for the SA government

In the face of trade adversity, the SA government must not fold its hands and do nothing. It is enlightening to note that the authorities have already initiated diplomatic and trade negotiations. Negotiations can possibly focus on tariff reduction, maintaining the AGOA, and delving deep in the logic used to arrive at the 30% tariff hike. The diplomatic initiatives must encompass improving perceptions and clarity of SA policies such as the Expropriation Act which is one of the reasons cited by the US administration in ratcheting the tariff trade war.

South Africa must re-orient its trading patterns and partnerships. The aggregate world gross domestic product (GDP) is greater than the US total production for goods and services. There is need for SA to improve trade relations with other economies to broaden its trade base. The current frosty trade relationship between SA and the US presents a window to strengthen trade with the EU, Asia, BRICS plus, Africa, and any other economy willing to get into trade partnerships. SA must explore other markets where the export goods still enjoy competitiveness.

To ensure economic resilience to trade wars in the long run, SA needs to seriously invest in research and development that promote value addition of local production, enhancing local production and technology advancement that can stimulate economies of scale, which can boost competitiveness of export goods. Competitiveness can be further enhanced by improving energy production efficiency, which is a crucial input of goods and services production. Developing a powerful and skilled human capital base can lead to labour productivity efficiency, further enhancing competitiveness. SA has a dilapidated infrastructure ranging from roads, rail, buildings and industry among others. Improving the infrastructure will go a long way in improving local production, leading to creation of jobs and improved incomes for households.

Boosting local economic activity can stimulate local consumption of goods as household income improves. If the incomes of SA citizens improve, there is a potential to increase local consumption. Goods meant for export markets can end up being consumed in the domestic markets, providing a homemade solution to dwindling export goods markets. The SA government must consider developing and supporting new industries that can compete in the local and international markets. In this way, the trade challenges posed by unfriendly US administration trade policies can present opportunities to the SA economy in the long run.

News Archive

During 2011: Achievements at the UFS

2011-12-01

Sarah Shannon

Dr Alex Amtaika, Department of Political Science

During a conference at Khon Kaen University in Thailand, Dr Alexius Amtaika from our Department of Political Science was elected as Executive Director and Convener of the International Committee of Scholars of Local Government. This honour was bestowed upon Dr Alexius during the first International Conference on Local Government at Khon Kaen University.

Sarah Shannon

We all have heard stories about inspirational people, who defy the odds, fight circumstance every day and never give up. Sarah Shannon has cerebral palsy but has never stopped dreaming and achieving them.

Sarah is also a competitive swimmer, and is currently ranked seventh in the world in her class of disabilities.

She is currently completing her postgraduate certificate in Education, Foundation Phrase, through Unisa. She is also studying Sociology at our university.

DW Bester and Sannah Mokone, Rhodes Scholars

Of the four open Rhodes Scholarships available to students from all universities in Southern Africa, two of our students won these prestigious scholarships. DW Bester, B.Sc. Hons. Actuarial Science student, and Sannah Mokone, BPub-cum laude student, joined Oxford University in the United Kingdom in September 2011 to further their studies.

The Rhodes Scholarships, arguably one of the most prestigious scholarships in the world, were founded in 1903 in the will of Cecil John Rhodes and cover the full costs of study at Oxford University.

While academic excellence is a pre-condition for consideration for the Rhodes Scholarship, these scholarships are unique in that Rhodes Scholars are outstanding young students who excel academically, but very importantly, demonstrate leadership, are committed to making a difference in the world, and have the energy to fulfill their ambitions.

Dr Derik Coetzee, Department of Sport and Exercise Sciences

When you suddenly receive a call during a World Cup year and requested to come and assist in leading the Springboks, then you have to know, you have something to offer. This is what happened to Dr Derik Coetzee from our Department of Exercise and Sports Sciences. This year he once again became involved in the Springbok rugby team, after he had been die Bokke’s conditioning trainer from 2004 to 2007.

His primary task as conditioning head was to help in seeing to it that the Springboks reached their best level of play – psychologically, physically an emotionally. Amongst others, his duties included the optimisation of the players’ muscle and explosive power, speed, anaerobic ability and technical skills.

Jefferson J Dirks-Korkee en Mart Kotzé

Jefferson J Dirks-Korkee, from Willowmore in the Eastern Cape, and Mart Kotzé from Bloemfontein, recently made history by being the first students from our Department of Drama and Theatre Arts featuring in an Afrikaans South African film Skoonheid, the first ever to be shown at the Cannes Film Festival.

The movie won the Queer Palm Award at the 2011 Cannes International Film Festival, where Robert de Niro was the chairperson of the panel of judges.

Prof. Muriel Meiring, Department of Haematology and Cell Biology

Prof. Muriel Meiring, Specialist Scientist in our Department of Haematology and Cell Biology, is responsible for establishing the Specialised Haemostasis Laboratory at our university and the Universitas Hospital’s National Health Laboratory Service. She established this centre as a reference centre for Von Willebrand disease, a genetic bleeding disorder, in South Africa. This laboratory is internationally recognised for their research and as a reference laboratory.

Prof. Meiring develops and tests antithrombotic (anti-clotting) agents and her long list of publications, research awards and congress presentations has earned her a nomination for the Department of Science and Technology’s Distinguished Woman Scientist Award. She was one of two scientists of the National Health Laboratory Services (NHLS) to receive the award – Prof. Meiring being the only woman from our university.

Medical facilities from all over the country make use of her and her team’s expertise when testing for blood disorders and she hopes to expand the centre even further.

Melinda Jonker

Melinda Jonker, one of our third-year financial economic students, won the overall national competition of the prestigious Traders Trophy competition at the Johannesburg Stock Exchange (JSE).

The competition, sponsored by Nedbank Capital and Oxyor in Amsterdam, requires participants to trade actual JSE-listed shares against one another on a simulated platform. The winner is determined not only by the highest profit, but also by the technique used throughout the trading session.

Christopher Diab, also a student from our Department of Economics, won the regional UFS competition.

ASSAf members

Seven of our academic colleagues have been elected as members of the Academy for Science of South Africa (ASSAf). They are Proff. Hendrik Swart, Physics; André Roodt, Chemistry; Zakkie Pretorius, Plant Sciences; Max Finkelstein, Mathematics; James du Preez, Microbial, Biochemical and Food Biotechnology; Maryke Labuschagne, Plant Breeding; and Neil Roos from our Postgraduate School.

Due main objective of the Academy is to promote and apply scientific thought in the service of the society, in order to determine the quality and scope of the role that the Academy can plays in the country’s life and progress, and eventually apply it

Other colleagues who are currently members of ASSAf include Proff. Jonathan Jansen, Vice-Chancellor and Rector; Johan Henning, Dean: Faculty of Law; and Frans Swanepoel, Senior Director: Research Development.

Samantha Renda-Dollman

Samantha Renda-Dollman, a BSc (Zoology) student on our Qwaqwa Campus, has obtained 19 distinctions out of the 22 modules she has written since 2009.

Her hard work earned Samantha the prestigious Dux Student award of our 2011 Annual Student Affairs Excellence Awards, held at our Qwaqwa Campus. This makes her the best overall academic performer of the entire student body on this campus.

Jaco Griessel

Jaco Griessel, an Honours student at our Odeion School for Music, received a prestigious Mandela Rhodes bursary for 2012 to study towards his Master’s degree next year.

Jaco, who is currently busy with his BMus Honours degree, is a performer par excellence, with many achievements to his name. In 2010, he received the Fanie Beetge Prize for the best undergraduate student in Systematic Music Studies. A year before, he received the same prize as best undergraduate student in Historic Music Studies. He shall continue his Master’s degree with Music Composition as field of specialisation at our university in 2012.

Prof. Helena van Zyl, UFS School of Management

Prof. Helena van Zyl, Director of the UFS Business School, was elected as President of the South African Association of Business Schools (SABSA). Since the beginning of 2010 she has been acting as president. Prof. Van Zyl is the first woman to occupy this position and also the first woman who is currently heading a business school in South Africa. She will serve SABSA as the president for the next two years.

Prof. Zakkie Pretorius, Department of Plant Sciences

Research by Prof. Zakkie Pretorius from our Department of Plant Sciences, has become part of Phase II of a mayor global project to combat deadly strains of a wheat pathogen that poses a threat to global food security.

Prof. Pretorius focuses on the identification of resistance in wheat to the stem rust disease and will assist breeders and geneticists in the accurate phenotyping of international breeding lines and mapping populations. In addition, Prof. Pretorius will support scientists from Africa with critical skills development through training programmes.

The Ug99 strain was discovered in Kenya in 1998, but are now also threatening major wheat-growing areas of Southern and Eastern Africa, the Central Asian Republics, the Caucasus, the Indian subcontinent, South America, Australia and North America.

Prof. Danie Strauss, research fellow in the Faculty of Humanities

Prof. Danie Strauss, a research fellow in our Faculty of the Humanities, won the Dooyeweerd Prize from the Board of the Association for Reformational Philosophies in Amsterdam. Prof. Strauss, former Dean of our Faculty of the Humanities and head of our Department of Philosophy, won the prize for his book Philosophy: Discipline of the Disciplines. The prize is awarded for work in the field of systematic philosophy.

Nida Jooste and Ryan Lamb, Abe Bailey Travel Bursary holders

Nida Jooste and Ryan Lamb are two of the proud recipients of Abe Bailey Travel Bursaries. Both students are academic achievers, but also excel in other fields. This is what set them apart from the rest of the applicants for the bursaries.

Ryan (23), a Medical Physics Honours student at our Faculty of Health Sciences, received the Senate’s Medal for the best Bachelor’s Degree student at the UFS. He was one of 100 students at the Brightest Young Minds Summit this year and was one of the 2008 delegates to the World Youth Forum, hosted by the International Association for Poetry and Solidarity in Italy.

Nida (21) is a very familiar face on our Bloemfontein Campus, as she served as the Deputy Chairperson of our Interim Student Council in 2011.

Loerie Award for Tarran Jacobs, Elizabeth Forson and Mafohlela Mahlatsi

The creativity of a group of students from our university was rewarded with a bronze Loerie Award after they won an internal competition. Tarran Jacobs, Elizabeth Forson and Mafohlela Mahlatsi, all third-year Marketing Communication students, won the award for an advertisement they designed for Cansa.

Each year, the third-year Marketing Communication students of our Department of Communication Science have the opportunity to flex their creative muscles in the Copy-writing class. The challenge is to design two advertisements for any charity organisation by applying the knowledge they gained from the subject in a practical way. The top three groups are then entered for the Loerie and Pendoring awards – two of the most prestigious awards in the South African advertising industry.

The top three groups designed advertisements for Cansa, the South African Blood Service and Crime Line.

Hendrik Kruger and Anke Malan walk away with awards at Pfizer UKZN Young Health Scientists Research Symposium

Two students in our Faculty of Health Sciences won awards at a Pfizer UKZN Young Health Scientists Research Symposium.

Hendrik Kruger, a medical student, represented his group, which won the clinical category with the paper “Injury patterns of occupants surviving motor vehicle accidents in the Free State”. This presentation was based on a study which is the first of its kind in South Africa.

The group with Anke Malan from our Department of Nutrition and Dietetics as presenter received the prize in the community-based category with the presentation ’Knowledge, practices and perceptions of undergraduate students at the UFS regarding the risk factors of osteoporoses’. Anke’s team was also nominated as the overall winner of the symposium. Presentations were delivered in three categories, namely clinical, community-based and laboratory research.

Prof. Louis Scott, Department of Plant Sciences

Prof. Louis Scott from our Department of Plant Sciences was formally rewarded the Fellowship of Royal Society of South Africa (RSSA).

Prof. Scott is an internationally recognised Palinologist at our university and a B-rated scientist.

Fellows of the RSSA are considered to be part of a very elite group of South African scientists who have achieved international acknowledgment.

Prof. Aldo Stroebel, International Academic Programmes in the Office of the Vice-Chancellor

Prof. Aldo Stroebel has been elected as a Founding Member of the South African Young Academy of Science (SAYAS).

He is Associate Professor in our Centre for Sustainable Agriculture, Rural Development and Extension, as well as the Director of International Academic Programmes in the Office of the Vice-Chancellor.

The Young Academy has as its objectives to represent young scientists in advising the government on science and technology policy and human resource development. In addition, they will prepare the SAYAS to join the Global Young Academy (GYA) to engage with high-level international bodies, including the World Economic Forum.

Prof. Lodewyk Kock, Department of Microbial, Biochemical and Food Biotechnology

Prof. Lodewyk Kock was a sought-after keynote speaker at various conferences and seminars around the globe on our nanotechnology breakthrough research.

He delivered keynote lectures at international conferences of repute in the USA, China and Greece. In the USA he delivered a the keynote address at the Conference & Exhibition on Pharmaceutical Regulatory Affairs (Pharma-2011), held in Baltimore, and was a keynote speaker at the 2nd World Congress on Biotechnology in Philadelphia. He was also invited to present various lectures abroad.

He posted two video lectures in e-conference format on his research on the web page of the journal Translational Biomedicine. He was also invited by the International Society of Translational Medicine (ISTM) to head their “Molecular Imaging” Division.

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