While there may be scope to negotiate the 30% tariff imposed on South African exports to the US, the country must prepare for the worst-case scenario and take steps to mitigate the impact on affected industries, business organisation Business Leadership South Africa (BLSA) CEO Busi Mavuso writes in her latest weekly newsletter.

US President Donald Trump on July 7 informed South Africa of its intention to impose a 30% tariff on South African products exported to the US, separate from sectoral tariffs, from August 1.

South Africa’s exports to the US make up just 2.2% of GDP and some of this basket will be unaffected because there are specific exemptions, particularly for raw materials such as platinum, gold, chrome and coal that the US deems critical, Mavuso points out.

The most critical sectors to be affected are vehicles and parts, agricultural output, steel and aluminium (which face 50%) and other manufactured goods. Certain companies would be considerably impacted as they are significantly exposed to the US market, she adds.

While some of those businesses will be able to find new markets for their output, this does take time and, in the short term, they may face a shock that could impact their supply chains, Mavuso postulates.

She says the critical question is whether affected companies can survive long enough to pivot to new markets.

“Shifting production capabilities and securing alternative import agreements takes years, not months. In the interim, hundreds of thousands of jobs hang in the balance,” she asserts.

Mavuso says government should immediately establish a tariff impact fund to support viable companies through the transition period, while simultaneously working with affected industries to identify and develop alternative markets.

Similar interventions like those pursued during the pandemic – such as government supporting companies with loan schemes and jobs with the Temporary Employer/Employee Relief Scheme – could be pursued, she suggests.

“Parallel diplomatic efforts with US counterparts remain important, but we cannot wait for their outcome,” she adds, explaining that the country should prepare for the worst and not leave finding solutions only after all other options have failed.

Government’s recent R753-million emergency funding for HIV programmes, necessitated by the US withdrawal of Pepfar, demonstrates a model for the challenge and response, Mavuso highlights.

While this is considerably below the programme’s previous spending, it shows government can move quickly when crises demand action, she acknowledges.

POLICE MATTERS

Meanwhile, while Mavuso also welcomed the announcement by President Cyril Ramaphosa on July 13 of the granting to Police Minister Senzo Mchunu of a leave of absence, she has asserted that proper suspension pending investigation would have been more appropriate owing to the severity of the allegations of lying to Parliament and interfering in police investigations of political assassinations in KwaZulu-Natal.

She posits that the appointment of Firoz Cachalia as acting minister suggests an effort to put someone into the role without political baggage and has welcomed this.

“However, it would have been better to see stronger action. Just two weeks ago, the President dismissed a deputy minister for the relatively minor infraction of taking an overseas trip without final approval.

“If we fire officials for procedural violations, how can we treat potential obstruction of justice investigations with less severity?” Mavuso queries.

She does, however, highlight that the announced commission of inquiry offers hope, provided it receives proper resources to support Acting Deputy Chief Justice Mbuyiseli Madlangawho who has been appointed to head it.