Global tariffs and Growth: Empowering South Africa’s SMEs

In business, risk and reward often go hand in hand. Most risks, whether operational, financial, or strategic, can be planned for, strategically managed, and even controlled. However, some appear without warning, shaped by global politics, trade decisions, or shifts in sentiment, leaving businesses with little time to prepare. The recent introduction of US tariffs on South African exports is one such example, and a reminder of how quickly the global trade landscape can change, especially as South Africa leads the G20 and B20 this year to shape the global policy agenda.

Earlier this month (April 2025), US President, Donald Trump announced a sweeping set of tariffs on virtually all goods imported into the US. The move affects trade with countries across Asia, Europe, Latin America, and Africa.

For South Africa in particular, the tariffs mark a significant shift in US trade policy, given the 30% levy on a wide range of South African goods and a 25% tariff on vehicle and auto component imports. These exports, supported under the African Growth and Opportunity Act (AGOA) contributed over $2 billion in exports to the US in 2024.

Shortly thereafter, the US introduced a 90-day pause, temporarily lowering these tariffs to 10% for most countries, including South Africa. While this gives businesses a breather, this is still a short window to review plans, engage trade partners, and explore alternative options.

Locally, the vehicle industry is one of the most vulnerable to tariffs, with 64% of AGOA-supported exports going to the US in 2024. The metals and machinery sectors are also at risk, especially as recent Stats SA data shows little to no growth in export volumes. Adding to this concern is the growing uncertainty about whether South Africa will continue to benefit from AGOA beyond its expiry later this year (2025). Discussions in the US about changing the eligibility rules make it even more important for local businesses to broaden their options and not rely too heavily on one trade agreement.

Agriculture is another area to watch. In 2024, South Africa exported about $538 million worth of farm goods to the US, with 72% of that falling under AGOA preferences. Citrus, macadamia nuts, grapes, raisins, and wine make up most of the list. These exports have grown quickly over the last decade, with AGOA-supported goods growing at an average rate of 9.3% per year, compared to 3.5% for other global markets. But the citrus industry, which is now in its peak season, is especially vulnerable to price changes and shipping delays. Exporters will need to respond quickly and strengthen trade ties across Africa, the Middle East, and Asia.

Our Group Chief Economist, Goolam Ballim, points out that these US tariff measures are part of a growing global trend of countries turning inward, which can undermine long-standing supply chains and strain global business ties. Businesses are encouraged to build flexibility into their operations and avoid putting all their focus on one market or trading partner.

Small and medium-sized businesses, especially those in food processing, logistics, and manufacturing, will need more support to keep up with changing trade rules, particularly when previous trade deals are delayed or changed without warning.

All of this is happening while South Africa holds the G20 presidency this year, giving the country a unique platform to push for fairer trade relations for developing markets. This G20 presidency and its B20 forum present an opportunity to showcase African innovation, build stronger international ties, and advance the role of small businesses in growing the African economy.

Despite the global challenges, South Africa’s small businesses can still unlock growth by reducing risks, exploring opportunities in new regions, and adjusting how they operate.

• First, expanding into more markets is essential. The African Continental Free Trade Area (AfCFTA), which brings together over 50 African countries, gives local businesses a strong alternative to global markets that may be harder to access or more uncertain.
• Second, building strong relationships with global partners remains key. For example, Standard Bank’s collaboration with international players like the Industrial and Commercial Bank of China (ICBC) help open up new trade routes, better financing options, and easier access to customers.
• Third, international banking services offered through Mauritius, Jersey, and the Isle of Man for instance (some of the jurisdictions where Standard Bank exists), can offer a level of control over foreign currency, more secure transactions, and help businesses manage cash flow in unpredictable markets.
• Lastly, businesses will need to focus on quality and innovation. Low-cost exports alone will no longer be enough to stay competitive in markets where tariff protections are rising.

Even as there is a lot of uncertainty at the moment, the local economy remains relatively stable. For example, South Africa’s inflation eased to 2.7% year-on-year in March 2025 from 3.2% in February, offering businesses a more predictable environment for planning.

It’s evident that the businesses that will fare better are those that move early, make confident decisions, and choose partners who understand what it takes to operate in fast-changing environments. Having the right banking partner, one that understands sector-specific dynamics, trade, forex markets and the specific challenges shaping domestic conditions, can make all the difference in turning possibilities into opportunities for the vibrant businesses that power Africa’s economy.