The imposition of import tariffs by the US calls for strategic collaboration – not just among businesses, but across sectors and borders, explain Meluleki Nzimande, partner and Shandré Smith, associate at Webber Wentzel.
On 2 April, the US administration issued an executive order imposing a baseline 10% import duty on nearly all goods entering the US. Higher country specific tariff rates were also applied, with South Africa subject to a 30% duty.
These country-specific rates were suspended on 10 April when a 90-day suspension came into effect, lasting until 9 July. However, the situation escalated again when, on 7 July, the US administration announced the resumption of the 30% increased tariff on all South African products entering the US, which became effective on 7 August. The US tariffs exclude only a few strategic commodities such as platinum group metals, gold, chrome, and coal.
These tariffs have significant implications for South Africa’s agricultural and manufacturing sectors. As of 2024, manufacturing contributes 13% to South Africa’s gross domestic product, down from 18% in 2004. The tariffs threaten to reduce exports, particularly for those industries which are heavily exposed to the US market.
South Africa’s export footprint is stronger in Africa, China, Europe, and the UK than in the US, offering room to shift market focus. The imposition of the US tariffs calls for strategic collaboration – among firms, across sectors, and across borders. The challenge is co-ordinating export strategies in the national interest without violating competition law.
Draft block exemption for exporters
On 12 August, The Department of Trade, Industry and Competition (DTIC) published a Draft Block Exemption for the Promotion of Exports (Draft Export Exemption) under the Competition Act 89 of 1998 (Competition Act). The Draft Export Exemption aims to enable exporters to collaborate legally, especially in the face of global trade disruptions.
The Competition Act empowers the Minister to exempt categories of agreements or practices that serve public interest objectives such as economic development, international competitiveness, and transformation and inclusion.
The Draft Export Exemption exempts the following categories of agreements or practices in the export markets from the application of sections 4(1)(a), 4(1)(b)(i), 4(1)(b)(ii) and 5(1) of the Competition Act:
- Joint marketing and branding – Exporters may collaborate on marketing campaigns and brand development for foreign markets. This includes joint advertising, promotional events, and shared branding strategies.
- Shared infrastructure – Exporters can share infrastructure such as warehousing, transport, and distribution facilities to reduce costs and improve efficiency in reaching export markets.
- Collaborative tendering – Exporters may jointly bid for foreign contracts or tenders, especially where scale or combined capacity is necessary to meet foreign demand.
- Information sharing – Exporters are allowed to share market intelligence, regulatory information, and technical standards relevant to foreign markets to improve compliance and competitiveness.
- Joint training and capacity building – Exporters can co-ordinate training programmes, workshops, and skills development initiatives aimed at improving export readiness and operational standards.
- Export financing collaboration – Exporters may jointly engage with financial institutions or government programmes to secure export financing, insurance, or guarantees.
- Co-ordination of export logistics – Exporters can co-ordinate shipping schedules, container usage, and customs procedures to streamline export operations and reduce duplication.
Why this is important for South Africa
With a 30% tariff, South African exporters face a dual challenge:
- Outbound goods to the US will become significantly less competitive, likely reducing export volumes and triggering production cuts.
- The economic impact on some firms could be severe, especially in sectors reliant on US trade.
- The exemption offers a legal framework for exporters to pool resources, co-ordinate strategies, and diversify markets – especially within Africa – where consumption is growing and trade integration is advancing.
The Draft Export Exemption is open for public comment, inviting stakeholders to submit comments by 2 September 2025. Interested parties may also request an extension. This is a critical opportunity for:
- Industry bodies to advocate for sector-specific needs.
- Small and medium enterprises to push for inclusive provisions.
- Alignment of the exemption with broader industrial policy.
The Draft Export Exemption outlines that exporters seeking to rely on the exemption must submit a request for confirmation to the Commission including details of the arrangement and supporting documentation to demonstrate compliance.
The Commission will assess the submission and issue a confirmation if the arrangement qualifies for an exemption. The confirmation granted may be revoked by the Commission if there is a breach of the safeguards outlined in the confirmation; the collaboration among firms exceeds the scope of the exemption; the confirmation was based on false information; or the original reason for granting the confirmation no longer applies. The exemption is enforceable for a period of five years from the date of publication or confirmation, unless extended or revoked earlier by the Commission.
South Africa’s response to the US tariffs is strategic.
South Africa is positioning itself to build a more resilient export economy by leveraging minerals, shifting markets, and enabling legal collaboration. The Draft Export Exemption is a key instrument in this effort, offering a pathway for lawful, co-ordinated, and competitive export growth for South Africa. South Africa would also do well to invest in a baseline infrastructure such as rail, ports, energy, water, and roads to unlock efficiencies which will meaningfully enhance the competitiveness of South African producers.