South Africa and President Cyril Ramaphosa are balancing on a delicate tight rope in search of new opportunities to grow the economy. As the saying goes when one door closes another will open. At the moment US President Donald J. Trump imposed a dead line on the 9th of July 2025 on tariff negotiations for quite a few of America’s trading partners. According to estimates, this amounts to over sixty nations, the BRICS members included. South Africa is not an exception. This deadline has not been met (unsurprisingly with only two days away). Trump for his part has now escalated the tariffs to about 30% plus a 10% penalty for supporting BRICS initiatives that seek to achieve less dependence on the USA. In this scenario some nations like Brazil face a steep 50% punitive tariff.
Trump had to extend his deadline to the first of August.
In the next five years there will be costs and economic pain for South Africa alongside many nations: The tariffs will affect Agriculture (USD 230 million), Automotive (USD 582 million) and Machinery (US$ 131 million) sectors negatively, removing R48 billion in revenue in the short term and R315 billion over 4 years. This translates to 48 000 export-oriented jobs in the short term and 315 000 in the medium term. The make America Great Again Movement comes from the economics neo-classical school of thought that views imports as a loss to the economy and exports as a benefit. MAGA then seeks to impose US exports all over the world. We must accept nonetheless that no nation can produce all the goods and services it needs to maintain and improve its standard of living- hence imports are beneficial to all countries involved.
The achievement of Full-Employment or maximum employment in the domestic economy is ideally driven by government expenditure and aggressive investment supported by suitable returns on investment and economic multipliers. A government must focus on the return on investment and economic multipliers of its expenditures and investments- that is what creates wealth for the citizens and the state. Not trying to reduce debt and deficits or manipulating tariffs and tax rates generally.
Ramaphosa and his government of national unity (GNU) have a terrible complication on their hands. On the one hand if they relent to Trump’s demands, they could lose the jobs in the long term as the economy shrinks. On the other if Ramaphosa stands firm and supports the BRICS plus initiatives to diversify trade away from the American hegemony the economy could grow stronger in the long run. Trump’s choice to use tariffs and other forms of trade barriers as blackmail could do more jeopardy to the United States economy than good. Pretoria needs to balance its interests with those of other BRICS member states. South Africa needs to look at protecting its economic infrastructure and search for other markets as alternatives for its goods. The Make America Great Again (MAGA) movement is hell bent on isolating the US economy and industries at the risk of endangerment.
South Africa has to have better relations with its neighbours and regional allies in the Southern African Development Community (SADC) to improve infrastructure connectivity and trade. South Africa stands as SADC’s largest economy with in the bloc. This is the main reason for its presence in BRICS. South Africa is a central player in all regional blocs. This is due to its strategic position. Pretoria must look elsewhere to attract investment rather than remain subservient to Trump’s demands. The success of MAGA’s policies depends on whether they can grow the US economy or not.
Trump’s approach is a lose-lose scenario which will see reduced consumption of key goods in America as well as diversion of trade to other BRICS countries. It is going to cement the BRICS countries together as mechanisms to increase non-dollar denominated trade among themselves increases under these conditions. Various measures can be taken by the BRICS countries to counteract Trumps actions. To enhance cooperation and resilience, BRICS countries should now move beyond trade and into development and investment. As the Belt and Road initiative is gaining strength, BRICS countries must now begin to move higher along technological value chains. This is going to achieve more resilience to shocks such as the ones presented by Trump and the Make America Great Again movement.
Ramaphosa with his experience in business and politics far outweigh those of Trump. The Belt and Road Trade initiative is a project created and led by China. It extends from deep into Europe and western Russia to South East Asia and spreads out to the Middle East and East Africa. South Africa alongside Brazil, India and Russia as well as other heavy weights in the BRICS bloc need to take full advantage of creating new supply and value chains away from Washington and Wall Street’s dictates. South Africa is at the heart of strategic decision making. It remains to be seen if the Ramaphosa government can shift its investment and development to strengthen ties with its BRICS Plus allies. As for the US under Trump its shift into slow isolation could be detrimental.
Article written by:
Yacoob Cassim
Journalist at Radio Al Ansaar
