Neelam Rahim | neelam@radioislam.co.za
3-minute read
01 August 2025 | 11:15 CAT

📸 Trade tensions mount: Former U.S. President Donald Trump and South African President Cyril Ramaphosa face off amid looming tariff threats that could derail R60 billion in investment. Photo credits: MSN

As the clock ticks towards a critical Friday deadline, South Africa’s R60 billion private investment pledge stands on shaky ground, facing the weight of a potential 30% tariff from the United States. Trade expert Donald McKay warns the likelihood of this tariff becoming reality is “fairly good,” sparking concern across key export sectors.

Speaking to Radio Islam, McKay unpacked the political nature of U.S. trade policy under Donald Trump, explaining, “Trump uses tariffs and access to the U.S. market as a hammer. This is extremely unusual and quite counterproductive.” He notes that South Africa’s position on geopolitical issues such as Gaza and Black Economic Empowerment (BEE) may be aggravating the situation.

India has already been penalized for arms and oil purchases from Russia, while Brazil faces a staggering 50% tariff for pursuing legal action against a former president. “Trump tends to intervene in the domestic politics of most countries,” McKay added, implying South Africa’s situation is not unique but is politically charged.

The looming tariffs could devastate South African exporters, especially those in agriculture. “The biggest impact is going to be on fresh fruits, citrus, table grapes, South African wine… where it’s very difficult to absorb labor,” McKay cautioned. Automotives are already burdened, with Mercedes-Benz halting production in East London due to a 25% import duty.

Despite South Africa dangling a significant investment carrot to influence Washington’s stance, McKay remains unconvinced. “Whether it sways [Trump], I don’t know… I hope it moves things, but I’m not optimistic.”

The broader concern remains South Africa’s dependency on U.S. trade routes. While diversification efforts are underway, McKay noted that “it’s a lot more difficult in reality than it is on paper.” The U.S. may account for 25% of global GDP, but it only represents 17% of world trade, leaving ample room and urgency for alternatives.

As the Friday deadline looms, many are left wondering whether South Africa’s R60 billion gamble will pay off or whether Trump’s tariff roulette will deal a heavy blow to an already struggling economy.

Listen to the full interview on The Daily Round-Up with Moulana Shuaib Lasanya and Trade Expert Donald McKay.