South African import and export businesses face a challenging environment due to potentially significant tariffs imposed by the US.
Verto South Africa, a cross-border payments provider, has put together practical advice to help businesses navigate these complex trade policies, should they become a reality.
“The imposition of tariffs on South African exports creates a complex and challenging environment for local businesses,” says Cornelius Coetzee, South Africa country director for Verto.
“While there’s a temporary 10% rate on many goods, the initial announcement of 30% and the ongoing 90-day review period mean businesses must prepare for potentially significant cost increases. Our goal is to equip South African importers and exporters with strategies to mitigate these impacts and maintain their competitiveness.”
South Africa has asked for more time to negotiate a trade deal with President Trump’s administration before his higher tariff regime goes into effect on 9 July, the Department of Trade and Industry said on Tuesday according to reporting by Reuters.
There are also indications that South Africa may need to submit a revised trade agreement, which would suggest a shift in the deadline according to Trade and Industry Minister Parks Tau.
The tariffs, initially announced at 30% and currently under review with a temporary 10% rate for many goods, fundamentally alter the economic landscape for South African businesses. They erode price competitiveness for exporters, making South African products more expensive for foreign buyers compared to alternatives.
This forces exporters to either absorb costs, risking profitability and job losses, or pass them to consumers, which could significantly reduce demand and market share.
For importers, retaliatory tariffs could increase input costs for manufacturers, potentially leading to higher consumer prices and inflation. The weakening Rand, often a result of trade tensions, further exacerbates import costs.
“These tariffs are designed to target South Africa’s manufactured goods, especially sectors like automotive and metals, undermining our industrial capabilities by limiting access to export markets for processed products,” explains Coetzee.
“The removal of AGOA benefits further complicates matters, as our goods no longer enter the US duty-free. This impacts profit margins, contributes to currency instability, and increases the risk of a global economic slowdown.”
Despite these challenges, Coetzee highlights that critical minerals like Platinum Group Metals and titanium are largely exempt from higher tariffs, representing a significant portion (76%) of South African exports to the US. Additionally, US tariffs on South Africa’s competitors offer a degree of trade advantage.
Coetzee offers the following strategies for businesses to navigate the current climate:
- Market diversification is paramount:South Africa is already engaging with countries in Asia and the Middle East. Finding new markets where export prices are acceptable and competitive will lower any negative impact of the US tariffs.
- Streamline operations and cut costs:To remain competitive, businesses may need to absorb some tariff costs. This necessitates maximum efficiency, looking for ways to cut costs and streamline operations to maximise every cent.
- Collaborate with government and industry:Coetzee stresses the importance of collective action: “The South African government and industry associations need to develop programs that help affected companies find and access new markets. We need intergovernmental task teams to prioritise agreements and protocols, and trade missions to support firms in finding new customers and establishing new supply chains.”
- Understand your value proposition:Re-evaluate what makes your product unique and indispensable. If the U.S. truly relies on what you’re selling, even with tariffs, they might still buy. Focus on your competitive advantages and develop go-to-market strategies to still gain market share.
- Stay informed and stay agile:Trade policies are a moving target and can still change. Companies that can pivot their strategies and approaches will be sure to be ahead.
To unlock significant growth, businesses should look to the dynamic markets of East and West Africa, Coetzee believes.
“The key is to derisk market entry by overcoming local financial complexities. By leveraging Verto’s platform that offers local collection accounts in key currencies (XOF, XAF, NGN, KES, TZS), you can eliminate traditional payment hurdles. This approach allows for secure, in-market collections and near-instant conversion to G3 currencies, transforming historically impenetrable markets into scalable opportunities for trade and expansion.”