Will South Africa be a US adversary or uncertain ally?

South Africa may be at risk of losing investments and being excluded as a beneficiary of the African Growth and Opportunity Act (Agoa) as retribution for its stance on geopolitical issues during Donald Trump’s second era as United States president.

These were among the concerns analysts and economists have raised ahead of Trump’s inauguration on 20 January.

The country’s exports to the US and jobs in the manufacturing and citrus sectors could be at risk, while Trump’s policies on import tariffs and onshoring could also lead to the dollar strengthening further against the rand in the coming months.

Centre for Risk Analysis executive director Chris Hattingh noted in the think tank’s latest Risk Alert report that Trump’s election has engendered “much nervousness abroad” regarding his potentially disruptive effect on global trade and geopolitics.

What is certain is that there will be a more transactional US diplomatic and trade stance, a predisposition towards domestic concerns and interests and more strident action against countries perceived to be acting against US interests.

“Should Mr Trump feel he and his country are not afforded what he considers the adequate level of respect and benefits, he will not shy from conflict, or the threat of conflict, to rectify matters,” Hattingh said.

He said the prospect of new US import tariffs is “highly likely”, as well as other trade pressure on countries to circumvent tariffs on Chinese products.

“South Africa is at particular risk in the second Trump era because it has already attracted the unfavourable bipartisan attention of Congress. 

“With the Republicans in firm control of the government and both houses of Congress, leading members of the party are already exerting pressure on the incoming administration to expel South Africa from beneficial trade arrangements such as Agoa [the African Growth and Opportunity Act] if Pretoria does not adjust its stance on China, Iran, Israel and Russia,” Hattingh said.

This will place jobs in the local vehicle manufacturing and citrus industries at risk.

Although South Africa’s diplomatic representatives have tried to downplay tensions and assure the US of their desire for a mutually beneficial relationship, the Trump administration is likely to be less indulgent of countries that expand relationships with nations it considers “hostile actors”, Hattingh said.

He said there was a risk that the Trump administration could redefine its relationship with South Africa to view it as an adversary rather than an uncertain ally.

“This would force South Africa to choose sides in the geopolitical power struggle between states that are broadly open and democratic versus those that are closed and autocratic,” he said.

But there is also a risk for the US: if it alienates too many nations historically regarded as friendly, it will drive them into the embrace of China and other Brics countries, weakening its position.

Dollar strength

Efficient Group Economist Dawie Roodt said the rand is already under pressure, partly because of Trump winning the election, and South Africa could be revoked from Agoa.

“The policy he’s known for is a policy of tariffs. So he’s going to zap tariffs on anybody he doesn’t like, and that could be South Africa, which could be kicked off Agoa eventually because there are Republicans who want to reconsider the relationship between South Africa and the US.” 

He said the imposition of tariffs will raise US inflation.

“The US consumer is going to pay for that and if there’s upward pressure on inflation, then that means interest rates will stay higher for longer, and that means that the dollar will appreciate again,” he said.

But PwC senior economist Christie Viljoen said there is no certainty on how Trump will implement his proposed tariffs.

“He could limit these tariffs to specific industries or commodities, or specific countries. At present, his proposal for universal import tariffs suggest South Africa and its commodities would be included in this blanket approach.” 

He said South Africa’s largest exports to the US — platinum group metals (R50  billion in 2023), vehicles (R20  billion), unwrought aluminium (R8  billion), ferro alloys (R5  billion) and titanium ores and concentrates (R2  billion) — will be affected.

“Metals and ores, used as manufacturing inputs in the US, are among the key risk categories for increased import tariffs as the Trump administration seeks to create a more competitive pricing environment for US-based suppliers,” Viljoen said.

Trump’s plans to onshore manufacturing to reduce dependence on imports could also affect South Africa, where the US has the fourth-largest inward foreign direct investment stock after the United Kingdom, Netherlands and Belgium.

“This could pressure foreign direct investment inflows from the US as industrial and manufacturing companies potentially channel more investment to the US and away from emerging markets,” Viljoen said.

Hattingh said if the US economy performs strongly, it could lead to the rand weakening; it dropped to R19.11 to the dollar last week, a 10.5% decline from 27 September.

“The picture is one of an ongoing rand weakening against the dollar in 2025. Weak growth fundamentals in South Africa mean the rand can offer little to resist the process. Increased geopolitical tensions and volatility in 2025 will expose these weaknesses, as investors lean into safe havens such as the dollar,” Hattingh said.