The African Growth and Opportunity Act (AGOA) was supposed to bring prosperity to African nations when it was signed into law in 2000.
South Africa was well-placed to benefit from the AGOA, which provides eligible countries with tariff-free access to US markets.
Not only had it recently become a democracy, the country possessed the continent’s biggest and most industrialized economy, and had maintained links to the United States, even during apartheid.
Yet, 25 years later, US President Donald Trump has South Africa in its crosshairs, and the AGOAhas not yet been addressed.
Trump takes aim at South Africa
The Trump administration has threatened to cut all aid to South Africa over a recently passed land reform bill that he views as potentially harmful to the country’s white minority, who own most of the country’s farmland.
Separately, Republicanshave called on Trump to punish South Africa for leading a case at the International Court of Justice accusing Israel of “genocidal” acts in its Gaza offensive, which Israel has denied.
Trump supporters also accuse South Africa of bowing to China’s demands to relocate Taiwan’s de facto embassy outside of the administrative capital, Pretoria.
AGOA membership comes up for review every year, and it is the American president’s call to renew the trade agreement or not. Even before Trump came to power, South African business leaders were concerned that the country’s AGOA membership was in jeopardy due to South Africa’s status as a BRICS nation, and perceived orientation towards Russia and China.
“South Africa should prepare accordingly to not continue forming part of AGOA,” Chris Hattingh, executuve director at the South African think tank Centre for Risk Analysis, told DW.
Trump’s foreign policy pivot already taking effect
By now, South Africa has felt the sting of Trump’s quickfire policies: the gutting of the development agency USAID has affected South Africans either employed by USAID’s assistance projects or those benefitting directly from them.
“It’s already playing out on thousands of people put on indefinite leave and most likely to lose jobs, particularly in the health sector, especially NGOs working in HIV and related programs,” said Mametlwe Sebei, president of the General Industries Workers Union of South Africa.
While the Trump Administration has cast the USAID shakeup as an effort to eliminate government spending, AGOA is primarily a trade agreement that has been criticized for being too friendly to American interests, as mostly raw materials are exported to the US.
“Even if AGOA is renewed, and perhaps a new form of AGOA is put in place, there are various items that might make it even more difficult for South Africa to form part of AGOA in the future,” Hattingh said, adding that automotive and agricultural sectors would be most negatively impacted.
This is because Trump wants to introduce reciprocal tariffs on Washington’s trading partners, and has targeted steel and aluminum imports with tariffs.
South Africa’s auto industry under threat
AGOA has helped expand the auto industry in South Africa, where seven big carmakers operate: BMW, Ford, Isuzu, Mercedes-Benz, Nissan, Toyota and Volkswagen.
Under AGOA, Washington charges no tariffs on cars imported from South Africa, and motor vehicles account for 22% of South Africa’s exports to the United States, worth $1.88 billion (€1.79 billion) — behind only precious metals, according to government statistics.
For Billy Tom, head of the Automotive Business Council, a pivot in trade relations between Pretoria and the US, such as exiting AGOA, would damage South Africa’s growing auto industry and have “a huge knock-on effect on the country.”
“It would be sending a message to the continent, because if you think of the role South Africa plays in AGOA, it’s quite big,” he told the Agence France-Presse (AFP) news agency.
Tom estimates 86,000 people are employed through AGOA, and about 125,000 people find work in related jobs as subcontractors or suppliers. South Africa’s automotive export industry was valued at nearly €1.2 billion in 2023.
“Most certainly there will be disruptions. Only one in four cars actually produced in this country are sold here,” said Sebei, adding that a “reorientation of the economy in quite a significant way” would have to follow.
Reorientation needed
Some analysts see South Africa’s economic interests as expendable to the current US administration, even if the US is South Africa’s second-largest trading partner.
Daniel Silke, director of the Cape Town-based Political Futures Consultancy, says this early 2025 run-in with the US reminds South African leaders that policies have “consequences.”
“Our internal policies need to be better handled and there needs to be better communication,” he told DW. “South Africa will now have more scrutiny on our domestic policies than we’ve had since the days of apartheid.”
But he says the US still has vested interests, with about 600 US-based companies trading in South Africa.
“South Africa remains critically important from an African continental point of view. President Ramaphosa is the G20 for the year, that’s an important position. And South Africa is an entry point into the African continent for many US businesses as well,” he said.
“The more extreme scenarios wouldn’t really help the United States in the medium to longer term in terms of whatever geopolitical play she wants to have,” Silke added.
According to the US government, in 2024, the US exported almost $5.8 billion worth of goods to South Africa, while South Africa sent $14.7 billion to the US — the most critical product being platinum. South Africa’s trade to the US has steadily grown each year since 2018.
Scramble for trade
South Africa’s two biggest parties, the African National Congress (ANC) and the Democratic Alliance (DA), have different approaches to foreign policy, but have to work together in the Government of National Unity (GNU).
Broadly speaking, the DA is more West-oriented, while the ANC enjoys decades-long links with Russia and China from its time as a liberation organization. This has made reaching policy consensus on how to deal with broadsides from the US “complex,” according to Silke.
However, for Sebei, the standoff between South Africa and the US provides an chance for South African leaders to reassess their priorities regarding trading partners to save jobs, particularly in the auto industry.
“All of those industries can be repurposed to serve the interests of the country,” Sebei told DW. He suggested that South Africa’s government should invest more in higher value industries to create jobs and produce for local markets rather than export.
“That is a policy that I think any serious government would pursue. You need a government other than the current conspiracy of neoliberal parties meant to intensify and escalate neo-liberal programs, privatizations and austerity measures,” Sebei says.
Silke points out that South Africa will just be one country joining the “scramble” for new trading partners to “make up the difference in lost trade to the United States.”
But he is optimistic that, from an economic perspecitive at least, that this may “push nations and regions to work more closely together and provide each other with the more favorable bilateral agreements.”
Thuso Khumalo and Okeri Ngutjinazo contributed to this article.
Edited by: Keith Walker
