Following the announcement of reciprocal tariffs by the United States that will impact all major trading partners, including South Africa, concerns are growing over the country’s continued participation in the African Growth and Opportunity Act (Agoa).

Agoa provides duty-free access to the US market for most agricultural and manufactured products, such as cars and parts exported by eligible African countries.

However, experts at Old Mutual Investment Group suggest that South Africa’s potential exclusion from the trade agreement may not be as damaging as some fear, given its declining relevance to the local economy.

At a quarterly investment briefing, Meryl Pick, Head of Equities Research at Old Mutual Investment Group, highlighted that the US, once South Africa’s largest trading partner, lost this status in 2009, with trade between South Africa and China now surpassing US-South Africa trade volumes.

“Exclusion from Agoa would be negative for sentiment, but our research indicates that the actual impact on GDP would be minimal—likely less than 0.1%—as only 10% of our total exports to the US fall under Agoa provisions.”

The US has also raised concerns over South African legislation, including the Expropriation Act and the Public Procurement Act, flagging them as barriers to American investment and trade.

While the possibility of South Africa’s removal from Agoa has resurfaced under the Trump administration, Pick stressed that these discussions predate the current leadership.

“There have been ongoing concerns in the US Senate regarding South Africa’s geopolitical alignments, particularly its ties to Russia. This was exacerbated by the Lady R diplomatic incident,” she noted.

“Other African nations, such as Ethiopia and Uganda, have also been excluded from Agoa in the past, indicating that South Africa is not alone in facing this risk.”

Meanwhile, the Presidency has conceded that Agoa may not be renewed, while emphasizing the need to urgently have bilateral talks with the US to continue trade.

The Minister of Trade and Industry plans to travel to the US to address the Agoa tariff threat.

Ministers in the economic cluster also answered questions in Parliament yesterday, during which Agriculture Minister John Steenhuisen stressed that alternative export markets will be sourced, if Agoa does not get renewed in September.

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