South Africa faces another significant economic challenge as the US moves to withdraw its preferential trade benefits under the
African Growth and Opportunity Act
(AGOA) from 1 January 2027. While the immediate concern is the potential loss of access to the American market on favourable terms, the development raises a much bigger question: How can South Africa build an economy that is competitive, diversified and resilient to global economic shocks? On 2 November 2026, the US government announced its intention to
withdraw
South Africa’s AGOA benefits, providing 60 days’ notice.
The decision has implications for South African exporters, industries, workers and the broader economy. AGOA is a US trade preference programme that allows eligible products from qualifying sub-Saharan African countries to enter the American market duty-free. For South Africa, the arrangement has supported exports of motor vehicles, agricultural products, base metals, chemicals and other manufactured goods. The potential loss of these preferences comes at a time when South Africa is already grappling with three persistent socio-economic challenges: poverty, inequality and unemployment.
An examination of South Africa’s exports to the US between 2019 and 2025 reveals an interesting pattern. South Africa’s total merchandise exports to the American market increased from approximately US$7.8 billion in 2019 to US$16.5 billion in 2025. This represents growth of more than 100% over the period. However, exports entering the US under AGOA followed a different trajectory. These exports increased from approximately US$1.2 billion in 2019 to US$4 billion in 2024 before declining sharply to US$1.7 billion in 2025. The decline of approximately 57,5% in a single year raises important questions about the changing nature of South Africa’s trade relationship with the US. These developments demonstrate how political decisions and economic uncertainty in one country can influence production, trade, investment and employment opportunities in another.
Why should ordinary South Africans be concerned?
When tariffs are imposed on previously duty-free products, the cost of supplying those products to the American market can increase. This may make South African goods less competitive relative to products from countries enjoying more favourable trading conditions. If American consumers and businesses reduce their demand for South African products, exporting firms may experience declining sales and production, leading to unemployment, thereby worsening poverty and inequality.
The role of government
The South African government’s willingness to engage the US in further negotiations is an important step towards protecting the country’s trade interests. However, diplomatic engagement should be accompanied by domestic economic reforms that strengthen export competitiveness. Addressing logistical inefficiencies, improving infrastructure, research and development, reducing production costs and supporting industrial development are essential for sustaining South Africa’s position in international markets.
A defining moment for South Africa’s economic future
The AGOA developments reflect a broader reality: the global economic environment is becoming increasingly uncertain. Trade protectionism, geopolitical tensions, climate change and disruptions to global supply chains are reshaping international economic relationships. For developing economies such as South Africa, these changes present both risks and opportunities.
The central lesson is that sustainable economic development cannot depend solely on preferential trade arrangements granted by other countries. It must be built on strong domestic productive capacity, competitive industries, skilled workers, effective institutions and diversified international partnerships.
South Africa should therefore view the potential loss of AGOA benefits not only as an economic setback, but also as an opportunity to accelerate structural transformation. The challenge is not simply to find another market for South African products. It is to build an economy capable of producing goods that the world wants to buy, regardless of preferential trade arrangements.
Ultimately, the need to grow the South African economy must become the driving force behind innovation, industrialisation, and economic transformation.
Dr Mudzingiri is a senior lecturer in economics in the Faculty of Economic and Management Sciences on the University of the Free State Qwaqwa Campus. His work focuses on behavioural and applied microeconomics, with interests in development, institutional quality, and policy. He writes in his personal capacity.