South Africa at a Crossroads: Tariffs, Trade, and the BRICS Balancing Act

Global trade faces renewed volatility after former U.S. President Donald Trump threatened a 10% tariff on countries aligning with BRICS. The announcement jolted financial markets, pushing the South African rand down nearly 1%. Though later framed as conditional on “hostile actions,” the threat has heightened geopolitical tensions just as BRICS—now expanded to 11 members—seeks to strengthen its role as an alternative to Western-led global governance. The risk of new tariffs not only threatens trade flows but also underscores deepening divides between established and emerging economies.

Currency Markets React: The Rand Under Pressure

The immediate market fallout from the U.S. tariff threat has been swift and visible in currency markets. The South African rand has faced sustained pressure against the U.S. dollar throughout 2024 and into mid-2025. As shown in the chart below, the USD/ZAR exchange rate experienced sharp volatility, with the rand weakening significantly during periods of heightened geopolitical tension.

The most notable spike occurred in early April, coinciding with the initial announcement of potential tariffs targeting BRICS-aligned nations. While the rand briefly recovered in May, the overall trajectory has remained negative, with the currency down approximately 6.69% year-to-date against the dollar as of early July.

This depreciation reflects investor concerns over:

• The risk of diminished export competitiveness if U.S. tariffs are imposed.
• South Africa’s ongoing structural economic challenges.
• Broader emerging market weakness amid global financial uncertainty.

For South Africa, a weaker rand poses a dual challenge: it may temporarily boost export earnings in local currency terms, but it also raises import costs, exacerbating inflationary pressures in an economy already struggling with subdued growth.

South Africa’s Trade Landscape: Key Partners and Shifting Dynamics

South Africa’s trade relationships reflect its strategic positioning at the crossroads of global commerce—anchored by longstanding ties with major economies like China, the United States, and Germany, while also engaging with emerging markets across Africa and the Global South.

Global Heavyweights: China, the U.S., and Germany

China remains South Africa’s largest trading partner, with bilateral trade heavily skewed in China’s favour. In 2024, South Africa imported approximately $21.8 billion worth of goods from China while exporting $12.4 billion, resulting in a significant trade deficit. The United States, by contrast, represents a more balanced and favourable relationship, with South Africa exporting $14.7 billion to the U.S. and importing $5.8 billion—a rare surplus for the South African economy. Germany holds steady as both a key import and export partner, with bilateral trade at roughly $7.1 billion each way.

These figures highlight not only the scale of South Africa’s trade but also the vulnerability to potential tariff escalations, particularly in its U.S. and Chinese engagements. The proposed U.S. tariffs could disrupt this delicate balance, pushing South Africa to deepen ties with China or seek new markets.

Strengthening Continental Trade: The African Dimension

Beyond its global partners, South Africa is increasingly looking inward to the African continent to bolster economic resilience. Regional trade with countries like Nigeria, Egypt, and Algeria, while smaller in absolute terms, represents a growing opportunity—especially as the African Continental Free Trade Area (AfCFTA) gains momentum.

In 2024, South Africa imported $2.5 billion worth of goods from Nigeria but exported just $380.4 million, largely driven by oil imports. Trade with Egypt and Algeria remains modest but presents room for growth, particularly in manufactured goods and agricultural exports.

This intra-African trade expansion is vital as South Africa seeks to cushion itself against external shocks from developed markets. With regional trade already exceeding $58.1 billion, Southern Africa is leading the continent’s push toward economic integration.

Strategic Shifts on the Horizon

The looming U.S. tariff threat could act as an accelerant for South Africa to:

• Deepen trade relations within Africa, reducing over-reliance on Western markets.
• Expand partnerships with BRICS members, particularly China and India.
• Leverage the AfCFTA to drive export-led growth across diversified sectors.

While global volatility remains a risk, South Africa’s ability to pivot towards balanced trade relationships—both globally and regionally—will be key to sustaining long-term economic stability.

Sectoral Impact: Who Stands to Lose?

As South Africa faces the threat of new U.S. tariffs on BRICS-aligned countries, the potential economic fallout will be far from evenly distributed. The impact is likely to be concentrated in sectors where South Africa is most dependent on U.S. export markets or where global supply chains are vulnerable to disruption.

Export Powerhouses Under Pressure

South Africa’s export economy is heavily reliant on a few key sectors, many of which could find themselves in the crosshairs of tariff escalation. The country’s top five export categories in 2024 showcase a resource-driven economy, with minerals and metals leading the way:

The automotive sector, which accounts for $12.57 billion in exports, is particularly vulnerable. With the U.S. serving as a major market for South African-built vehicles, including models from BMW, Mercedes-Benz, and Ford, a proposed 25% tariff on foreign-built cars could sharply erode competitiveness. The auto industry not only contributes approximately 5% of South Africa’s GDP but also supports over 120,000 jobs.

Similarly, iron and steel—valued at $5.77 billion in exports—would face steep 25% tariffs under the proposed measures. These industries are crucial to South Africa’s industrial base and export earnings, making them key pressure points in any trade dispute.

Agricultural exports, particularly citrus fruits, avocados, and wine, also risk disruption due to the U.S. proposal of a 30% blanket tariff on certain goods, threatening rural employment and smallholder farmers.

Import Dependencies Pose Additional Risks

South Africa's economic exposure extends beyond exports. The country’s top five import categories in 2024 highlight critical dependencies that could amplify the impact of any trade realignment:

South Africa imports nearly $20 billion in fuels and over $12 billion in machinery—inputs essential for both industrial operations and infrastructure development. A deterioration in trade relations or global supply chain disruptions could inflate costs for these critical imports, compounding inflationary pressures and hindering economic growth.

Sectors with Resilience

Not all sectors face the same level of risk. South Africa’s dominance in the export of precious metals, including platinum and gold—worth over $20 billion—offers some insulation, as global demand for these commodities remains robust and less sensitive to U.S. tariff decisions.

Additionally, the mining sector, driven by exports of ores, slag, and ash (valued at $17.21 billion), is supported by diversified international demand beyond the U.S., particularly from Europe and Asia.

The proposed tariffs would strike at the heart of South Africa’s export economy—particularly autos, metals, and agriculture—while potentially raising costs in key import categories like energy and machinery. As the government navigates these headwinds, strategic diversification of trade partners and continued investment in resilient sectors like mining and services will be essential to mitigating the fallout.

Geopolitics and the BRICS Balancing Act

South Africa’s membership in BRICS offers both opportunities and risks. As the smallest economy among the founding members, it uses the platform to amplify its global voice, advocating for reforms in international institutions like the UN Security Council and IMF.

BRICS provides tangible benefits:

• Access to New Development Bank infrastructure loans (30% now denominated in local currencies)
• Reduced dependence on the U.S. dollar
• Expanded South-South trade and investment

However, this positioning also invites Western scrutiny, as highlighted by the potential U.S. tariffs and recent executive orders limiting aid. South Africa's strategic aim is to remain a diplomatic bridge—leveraging both its Western ties and BRICS alliances—while pursuing domestic economic priorities such as energy security, renewable transitions, and employment growth.

Conclusion: Navigating Uncertain Waters

The threat of U.S. tariffs underscores the fragile fault lines of the global trade order. For South Africa, the stakes are high. The immediate market reaction—the rand’s 1% fall—reflects genuine concerns over export competitiveness, with economists warning that an additional 10% tariff could significantly erode trade margins.

Yet South Africa also holds cards of its own: unrivalled mineral wealth, growing intra-African trade, and a central role in BRICS. By balancing Western partnerships with new alliances, diversifying export markets, and deepening regional integration through the African Continental Free Trade Area (AfCFTA), South Africa may not only weather the current storm but also accelerate its transformation toward a more self-reliant and influential role in the evolving global economy.