South African consumer confidence plunged to the lowest level in almost two years, as worries about higher taxes and the country’s deteriorating relations with the US weighed on sentiment.

A quarterly index measuring consumer sentiment slumped to -20 in the three months through March from -6 in the previous quarter, FirstRand Ltd.’s First National Bank said in an emailed statement on Tuesday. That’s the lowest level since the second quarter of 2023.

“The prospect of significantly higher taxes — either via value-added tax hikes or further bracket creep on the personal income tax front — likely alarmed many consumers,” the Johannesburg-based lender said. “The souring of diplomatic relations between South Africa and the US and the corrosive knock-on effects of the trade wars triggered by US President Donald Trump likely also contributed to the extraordinary deterioration in sentiment.”

South African Finance Minister Enoch Godongwana on March 19 proposed raising the VAT rate by a full percentage point to 16% by mid-2026 — in two half-point steps — and won’t adjust personal income-tax brackets for inflation in a bid to boost revenue.

The country’s relations with America — one of its biggest trading partners — have deteriorated after Trump criticised South Africa’s land-expropriation laws and its relations with Iran and its proxy, Hamas.

“The collapse in consumer confidence and deterioration in the outlook for household consumption expenditure should set alarm bells ringing in terms of SA’s economic prospects,” FirstRand said. “The combination of rising inflation, tight monetary policy and higher real taxes will erode households’ ability to spend, while plunging consumer confidence levels signal a dramatic decline in consumers’ willingness to spend.”