Magnetyc

SOUTH AFRICA’S GRADUATION OUT OF AGOA DOESN’T MEAN WE WON'T HAVE ACCESS TO THE U.S. MARKET. WE WILL HAVE ACCESS, BUT WITH SLIGHTLY HIGHER TARIFFS. While we are now in a different political climate, I think it’s important to remember that aside from the issues the U.S. raised about South Africa’s eligibility to be part of AGOA, there have been some conversations for some time. For example, back in 2014, the focus, amongst other things, was on the reality that South Africa is an upper-middle-income country and should have graduated from AGOA to a full bilateral trade agreement with the U.S. Of course, we had our own complications, both because of the Southern African Customs Union (SACU), which we can’t sign bilateral trade agreements without, and because we lobbied to keep benefiting from this unilateral approach (AGOA). Looking back, if we had found a way to graduate out of AGOA, as we were pressured to do then, and started conversations about a trade agreement, we would be in a different climate than what we are seeing now. Of course, this doesn’t mean countries with trade agreements are spared from drastic changes in U.S. trade policy; we see those changes affecting countries like Canada. Beyond South Africa graduating out of AGOA, I think there is also confusion about the implications. Others frame it as a complete ban from the U.S. market, which is not the case. Simply put, as South Africa transitions out of AGOA, the country would face an additional Most Favoured Nation tariff of around 3.4% on top of the existing tariffs the current U.S. Administration added to various countries. Currently, some South African products enter the U.S. market at 12.5% tariffs (Liberation Day tariff). Without AGOA, these tariffs would rise to 15.9%, slightly reducing the competitiveness of some South African products in the U.S. market. Still, one could argue that while this would be a challenging path, it would not necessarily be as catastrophic as we have faced in the past, when we faced much higher U.S. tariffs and still managed to compete. Consider South Africa’s agriculture: in 2025, the South African farming sector faced tariffs of around 30%. Still, agricultural exports to the U.S. were strong. South Africa’s agricultural exports to the U.S. in 2025 totalled US$504 million, down 3% from the previous year. During the higher “Liberation Day Tariffs”, some South African agricultural exporters took advantage of the 90-day pause in the second quarter of 2025 and exported more volume than usual. After this pause, exports cooled in the third and fourth quarters of 2025. Notably, South Africa’s agricultural exports to the U.S. fell 11% in the third quarter of 2025, compared with the same period in 2024, to US$144 million. In the last quarter, South Africa’s agricultural exports to the U.S. fell sharply by 39% to US$81 million. Still, the overall annual exports were encouraging. Even this year, South Africa’s agricultural exports to the U.S. were strong. For example, South Africa's agricultural exports to the U.S. increased by 56% from the first quarter of 2026 to the second quarter of 2026, to US$123 million. The decline in U.S. tariffs, from 30% to 12.5%, among other factors, has been the major contributor to the increase in South Africa’s agricultural exports to the U.S. The U.S. remains an important market for South African agriculture, accounting for about 4% of our agricultural exports. Main exports include citrus, berries, grapes, raisins, wine, fruit juices, apples, pears, apricots, and nuts. Again, South Africa's graduation from AGOA must be viewed in context and may not mean a catastrophe. This is not to understate the impact some industries may feel as the increase in tariffs slightly reduces their competitiveness. Still, we must manage the sentiment and narrative around this issue well. Above all, this yet again reminds us of the need to work hard to diversify South Africa’s export markets to growing regions such as Asia and the Middle East. But export diversification must be framed correctly; it is not a replacement for the U.S., EU, UK, Africa, and other markets. These remain key, and we must work to retain our access to them. --Wandile