South Africa must build trade relationships more widely owing to the risks to the economy from the tariffs imposed by the US administration under President Donald Trump, says business lobby organisation Business Leadership South Africa (BLSA) CEO Busi Mavuso.

While the US is not South Africa's largest market for locally made cars, it is responsible for about 5% of light vehicle exports and earns about R26-billion of revenue for South Africa. This is at risk following the imposition of 25% tariffs on automotive imports by the US, she notes.

“Some of these exports will be able to find alternative markets, especially as reciprocal tariffs mean US vehicles will be shunned by many other countries, including our biggest vehicle market Europe. But the international consequences are severe, with global supply chains disrupted, driving prices higher and damaging demand.”

The world is heading for a rethink on how countries engage in international trade. Many countries will feel they should become less dependent on the US as a market for their goods. A clear lesson from the latest US actions is that the more diversified a country's trading partners are, the more resilient it is to shocks from any one of them, she adds.

Doing so requires efforts by business and government. The Department of Trade, Industry and Competition (dtic) is responsible for developing trading relationships at a diplomatic level and developing trading agreements with appropriate markets.

Businesses, however, also need to develop strategies that give them market access and traction.

This has become more urgent, as the African Continental Free Trade Area AfCFTA) Agreement has been steadily evolving and now covers many products and services, but vehicles are not yet on the list, Mavuso points out.

“Other long-running trade negotiations, such as with India, now need a new sense of urgency. Last year, Trade, Industry and Competition Minister Parks Tau committed to bolstering trade with India, as well as the rest of the world generally, which is a welcome ambition,” she adds.

“We must expect that the [US duty-free trade] African Growth and Opportunity Act (Agoa) will come to an end in September when the current programme is set to expire. The end of Agoa is set to damage our automotive exports, and it will damage other parts of our trade with the US, particularly agricultural goods,” she emphasises.

Overall, Agoa covers a relatively small component of South Africa's total export basket to the US, which is dominated by raw materials, but it will be a challenge for certain industries, Mavuso says.

Business and the dtic must work together to find new opportunities within a new geopolitical framework, she highlights.

South Africa should seek new trading relationships, such as with the Middle East, with which it has limited engagement other than as an importer of oil. There are opportunities across these and other markets and the country needs a programme of engagement, Mavuso argues.

Trade with the rest of Africa is obviously also a huge opportunity and South Africa must work to extend the AfCFTA Agreement to cover a wider basket of goods including vehicles, she adds.

Meanwhile, South Africa is making progress on the logistics that enable exporters to get their goods out to the rest of the world, and rail and port performance has been improving.

Further, a more radical step change is on the horizon after Transport Minister Barbara Creecy issued a formal request for information to the private sector “to develop an enabling environment for private sector participation and enhanced investment in rail and port infrastructure and operations”.

“This potentially opens the opportunity for a competitive rail and ports sector, in which the State continues to own the infrastructure and private sector firms can manage it and compete to offer the best service.

“Our ports are among the worst-performing in the world but a future in which they are in fierce competition with each other to offer the best service to businesses in South Africa is an important part of making our output more competitive,” Mavuso says.

The world is facing a major shift in the global trading system and government and business must engage widely and build opportunities that will improve the resilience of the economy and enable growth and employment, she advises.