South Africa Faces Looming Job Crisis as U.S. Tariffs Threaten Key Export Sectors
South Africa is bracing for a potential economic shock, with projections pointing to 100,000 job losses if a new U.S. tariff regime takes effect on August 1, 2025. The proposed 40% duty on exports to the United States—driven by policy shifts under President Donald Trump’s administration—targets South Africa’s most critical export industries: agriculture and automotive manufacturing.
AGOA Benefits at Risk
For decades, both sectors have benefited from the African Growth and Opportunity Act (AGOA), which allows duty-free access to U.S. markets for eligible African countries. The looming tariff threatens to erode these gains, triggering widespread economic fallout across southern Africa.
Central Bank Governor Lesetja Kganyago raised alarms in a recent radio interview, noting that “the impact on agriculture could actually be quite devastating because agriculture employs a lot of low-skilled workers.” Citrus fruits, table grapes, and wines are among the most vulnerable products.
In 2024, vehicles and vehicle components accounted for 10.7% of South Africa’s total exports to the U.S., while agricultural products represented 4%. Notably, automotive exports made up 64% of all South African AGOA exports to the U.S. last year.
Regional Ripple Effects
Lesotho, another AGOA beneficiary, is also under threat. With 80% of its garment exports destined for the U.S. market, the country could lose up to 20,000 jobs if the planned 40% tariff on clothing exports is enforced. The remaining 20% of Lesotho’sapparel output serves neighboring countries within the Southern African Development Community (SADC).
Export orders are already declining in anticipation of the tariff, and initial job cuts have begun in South Africa and beyond.
Policy Crossroads and Strategic Moves
South Africa has already seen partial tariff implementations—25% on vehicles and 30% on auto parts—and may face further pressure to adjust its domestic policies. Observers suggest the government could revisit aspects of its Black Economic Empowerment (BEE) regulations to accommodate foreign investment, notably Elon Musk’s interest in launching Starlink operations in the country.
As speculation swirls about Musk’s influence within U.S. political circles, some stakeholders see a potential diplomatic avenue through tech-sector investment that may soften Washington’s tariff stance.