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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

Conference: Expanded ARV treatment

2005-03-02

VENUE: University of the Free State, Bloemfontein, South Africa
DATE: 30 March 2005 - 1 April 2005

ARV Programme as on 24Feb Download Word document
Programme Special events Download Word document

Official web site www.fshealth.gov.za/subsites/arvc

Rationale for the Conference
At the time of the planned Conference, much ground would have been covered, both in the Free State and in South Africa, in respect of the expanded public sector ARV treatment programme in respect of research, experiences in practice, training of staff, treatment of patients, lessons learned, successes and failures, etc. The time would then be quite opportune to share these in a systematic manner with other provinces and countries, as well as with the large variety of stakeholders and role players in the ARV and related domains, be they academics and researchers, policy makers and service/facility managers, the variety of caregivers, and the community organisations and affected patients.

The Conference and current research
The proposed Conference is, firstly, directly linked to the current research on the public sector roll-out of ARV treatment in the Free State conducted by several research institutions (e.g. CIET, CHSR&D, UCT Lung Institute). Secondly, the Conference could and would serve as a forum for other research groups in the country and further a field to report and share knowledge and experiences on ARV treatment and related initiatives. Lastly, the Conference will stage a golden opportunity for researchers and scientists, on the one hand, and policy makers, managers, and caregivers (as knowledge users), on the other hand, to engage in cross-disciplinary discourse on this mutual and topical theme.

Theme of Conference
Expanded ARV treatment in the Free State: sharing experiences

Focus
The focus is primarily on public sector ARV treatment in the Free State, but also initiatives/activities/perspectives of relevance to the Free State elsewhere in the country at large and further a field, as well as relevant ARV initiatives in the public, private, NGO and FBO sectors. Bear in mind, however, that ARV treatment is but part of a much more comprehensive approach to HIV and AIDS. The Conference will, therefore, not narrowly focus on the ARV treatment programme only. The broader context, other relevant dimensions, and a comprehensive approach to the challenges of HIV, AIDS and TB are of equal importance.

The purpose of the Conference
Enhance meaningful exchange, mutual understanding and collaboration among researchers, scientists, policy makers, managers and practitioners in the field of ARV treatment and related fields.

Share experiences in the various spheres of ARV treatment and related spheres (policy, management, practice, research, training, public-private-civil society sectors).

Record, reflect and report on the establishment of the ARV treatment programme in the Free State, and in within the context of the comprehensive HIV/AIDS programme.

Disseminate important research results on ARV treatment and related themes to health policy makers, managers, practitioners, communities and to the research community.

Stimulate discourse among various disciplines and various stakeholders/role players involved in ARV treatment and related programmes.

Sensitise and acquaint researchers to the requirements of policy makers, managers and practitioners in respect of ARV treatment and related fields.

Facilitate the implementation of research results in ARV treatment policy, programmes and practice.

Dissemination of Conference-related information
Information generated during the Conference could feed into policy, management and practice of ARV treatment, the training accompanying such programme, and the existing body of knowledge. After the Conference the information will be disseminated via the Internet and by scientific and popular publications.

Date and duration
Set for 30 & 31 March & 1 April 2005; to commence at 09:00 on the first day (30 March) and to end at 16:30 (1 April) the third day.

Format and scope of Conference
Alternating plenary, parallel sessions and debates focused on topical issues and interest groups. The Conference will strive to be maximally interactive and participative.

Themes and topics to cover:

Policy, management and health services/practice (various levels and contexts – clinical treatment, information, IT systems, pharmacy, laboratories, nutrition)
Research covering all relevant disciplines and diverse dimensions of ARV treatment and related themes
Training and evaluation of training
Patients, communities and civil society organisations
Public, private, NGO, FBO initiatives and partnerships

Emphasis will be on the Free State, however, with of significant involvement from other provinces, SADC countries, and countries further a field. The thrust will be to export lessons and experiences from the Free State, but also to import lessons and experiences from other provinces, countries and sectors.

Presenters
Key presenters from the Free State, other provinces, South Africa, from the private, FBO and NGO sectors, and from several other countries

Delegates
About half of the delegates will be Free State stakeholders and role players (all levels and all contexts). The other half will be role players and stakeholders in the ARV and related fields from other provinces, the national level, and other countries, as well as from the private, public and non-governmental sectors.

Focused workshops
Provision will be made for half-a-day or one-day workshop initiatives on the third day (1 April 2005).

Enquiries
For more information please contact:

Prof Dingie van Rensburg
Centre for Health Systems Research & Development
University of the Free State
PO Box 339
Bloenfontein
SOUTH AFRICA
9300

Contact:
Carin van Vuuren
Conference Organiser
Centre for Health Systems Research & Development
University of the Free State
P.O.Box 339
Bloemfontein
South Africa
9300
Tel +27 (0) 51 401 2181
Fax +27 (0) 51 4480370
Cell 0832932890
e-mail: arvconference.hum@mail.uovs.ac.za

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