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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

State of our campuses: UFS closes campuses until Friday 28 October 2016 to readjust academic programme

2016-10-15

UFS announces strategy for completion of the 2016 academic year

Agreement between UFS management and student leadership in relation to residences

After almost four weeks of student protests about fees at the University of the Free State (UFS) and the subsequent suspension of the academic programme and closing of campuses, the senior leadership announced on 14 October 2016 a strategy to ensure that students will be able to complete the 2016 academic year.

The university on 13 October 2016 announced that it will shut down its Bloemfontein and South Campuses until 28 October 2016 for crucial and complex arrangements to be put in place to readjust the academic calendar and ensure that all students can complete their studies. The senior leadership did, however, make it clear that the university will not be shutting down for the remainder of 2016.

No teaching and learning activities at undergraduate and honours level will be offered between 17 October and 28 October 2016. The university will re-start teaching and learning at undergraduate and honours level in the first week of November 2016.

However, teaching and learning will not take place in the classrooms during November 2016, but through a different mode of delivery that consists of a combination of printed and recorded lectures, study materials and learning aids that will be provided by the university and delivered through Blackboard. In this manner no attempts at disrupting the rest of the academic year will affect our students’ academic programme. Students, however, will sit for the exam on campus.

Students in residence accommodation can return to campus as from 29 October 2016 and it is recommended that students who do not have off-campus internet access return to campus in order to access study material to complete the academic year.A new timetable for exams is still being developed and will be communicated as soon as the arrangements have been finalised.

Faculties have been differently affected by the loss of teaching time. Some faculties like the Faculty of Law have completed their curriculum, while other faculties like the Faculty of Natural and Agricultural Sciences require more teaching time. Some faculties, like the Faculty of Health Sciences, cannot do teaching through alternative modes of delivery.

The needs of the different faculties have been taken into account for developing a rescue plan to complete the 2016 academic year.

The Faculty of Health Sciences will continue its classes and clinical rotations as normal for all three schools on the Bloemfontein Campus and in the relevant hospitals. All students registered in programmes in the Faculty of Health Sciences will stay in residences for the full period of their studies and exams. Final-year medical students will graduate in December 2016 as expected.
In the Faculty of Economic and Management Sciences, final-year students for the Certificate in the Theory of Accounting (CTA) will stay on campus during October through to December 2016 and their classes and tests will not change.
Arrangements for all other faculties and programmes are being prepared and within the next week, students and parents/guardians will receive communication about how curriculum content will be completed and when the final exams will take place.
The university is extending the academic year so that we can recuperate all the lost teaching and learning time. The qualifications conferred on the 2016 class will be of the same quality and standards as all UFS qualifications.

The UFS is and will remain a fundamentally contact teaching and learning education university. However, under the current circumstances faced not only by the UFS, but higher-education institutions across the country, the best way of ensuring the integrity of the academic programmes in most faculties is by using an alternative way of teaching and learning. Other South African universities have chosen the same approach to be able to complete the academic year.

Instead of students going to class, they will have content delivered to them where they are (library, computer labs, their own computers, etc.) through Blackboard and printed and electronic material. This is a different way of learning but students will be carefully guided and supported.

Faculties are currently preparing all the necessary materials and instructions to support student learning.Standards and quality will be the same as if students were attending classes. Some faculties require practical laboratory work as part of their curriculum. The exam timetable will be adapted for these students to be able to complete their practical work when the academic activities commences in November 2016. The relevant faculties will communicate the schedule of practical work directly to the students.

Students in their final year will complete their studies during 2016. It is possible that in some cases the graduation ceremony for these students will be in June 2017 instead of April 2017. This will not prejudice students with bursaries, or committed employment in law firms or other businesses. The university will provide the necessary academic transcripts as proof of the completion of the relevant qualifications. None of these changes will affect postgraduate students.

The university will maintain regular communication with students and parents/guardians to update them on the new exams timetable.Faculties will communicate directly with students about issues related to their programmes.

“One of the areas in which significant progress was made, is that we were able to agree on a basis for stability with student leaders. The student protests occurred during an important time in the university’s academic calendar and the readjustment of our academic programme has put tremendous pressure on academic and support services staff, and created anxieties for parents,” said Prof Nicky Morgan, Acting Rector of the UFS.

“The senior leadership restates its commitment to free education as well as its willingness to stand together with students and other public universities to impress on government the urgency to decide on a time frame for the roll-out of free higher education for the poor and missing middle. We will use the next two weeks to meet with the leadership of Universities South Africa to coordinate collective action in this regard. We will furthermore also roll out a series of activities to inform and educate students and the general public on different models and experiences of providing free higher education,” he said.

The strategy to readjust the 2016 academic year is applicable to students on the Bloemfontein and South Campuses.

Released by:
Lacea Loader (Director: Communication and Brand Management)
Telephone: +27 51 401 2584 | +27 83 645 2454
Email: news@ufs.ac.za | loaderl@ufs.ac.za
Fax: +27 51 444 6393

State of our campuses #15: UFS closes campuses until Friday 28 October 2016 to readjust academic programme

State of our campuses #14: All academic activities on UFS campuses remain suspended on 13 and 14 October 2016

State of our campuses #13: Availability of information about plans for remainder of UFS 2016 calendar year

State of our campuses #12: All academic activities at UFS campuses suspended for 11 and 12 October 2016

State of our campuses #11: Academic activities on UFS campuses continue

State of our campuses #10: Impact of non-completion of the 2016 academic year on UFS students

State of our campuses #9: Academic programme on all UFS campuses to resume on Monday 10 October 2016

State of our campuses #8: UFS extends vacation as from 28 September until 7 October 2016, 28 September 2016

State of our campuses #7: All three UFS campuses will be closed today, 27 September 2016.

State of our campuses #6: All UFS campuses reopen on Tuesday 27 September 2016

State of our campuses #5: UFS campuses to remain closed on Monday 26 September 2016

State of our campuses #4: Decisions about the UFS academic calendar

State of our campuses #3: UFS campuses closed until Friday 23 September 2016

State of our campuses #2: UFS Bloemfontein and South Campuses closed on Tuesday 20 September 2016 (19 September 2016)

State of our campuses #1: Academic activities suspended on UFS Bloemfontein Campus (19 September 2016)

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