Warning: mysqli_query(): (HY000/1030): Got error 28 from storage engine in /home/africanb/public_html/wordpress/wp-includes/wp-db.php on line 1924

Warning: mysqli_query(): (HY000/1030): Got error 28 from storage engine in /home/africanb/public_html/wordpress/wp-includes/wp-db.php on line 1924
Tariffs exacerbate US-South Africa rift - African Business Magazine
Close
Tariffs exacerbate US-South Africa rift

Tariffs exacerbate US-South Africa rift

Four years into a presidency rich in bilateral visits, US President Barack Obama and his entourage finally landed in South Africa in June 2013. While the President’s lack of haste in visiting Africa’s then-largest economy surprised observers – he had visited Ghana as far back as 2009 – the content of his visit made up for his late arrival.

After a brief stay in Johannesburg and meetings with President Jacob Zuma in Pretoria, Obama made a historic visit to the Robben Island jail cell of Nelson Mandela. Soon after, he used a speech at the University of Cape Town to launch Power Africa, a flagship venture to boost energy production across Africa. 

Fast forward five years and relations between South Africa and the United States appear far from the glowing rhetoric of the Obama years or the extensive development aid of the George W Bush era. Over a year since the election of President Donald Trump, the US administration has yet to install an ambassador in Pretoria, while Trump’s nationalist “America First” economic agenda has burdened South African exporters with aluminium and steel tariffs. Meanwhile, South Africa’s sharply differing foreign policy views – not least on Israel and Palestine – have prompted the US to threaten to withdraw aid if they continue to pursue an alternative UN voting record. 

While South African relations with Presidents Obama and Bill Clinton also got off to a slow start prior to the launch of major initiatives, analysts are asking whether the current events presage a longer-term chill in relations or simply reflect Trump’s limited interest in developing world countries that do not present an economic or security threat.  

“If you go back to Clinton there was the African Growth and Opportunity Act, with Bush there was the President’s Emergency Plan for AIDS Relief (PEPFAR) and for Obama there was Power Africa,” says Chelsea Markowitz, researcher in the Economic Diplomacy Programme at the South African Institute for International Affairs. “We haven’t really seen that with Trump at all, there hasn’t been any interest in a legacy programme to solidify relations on the continent. With Trump’s transactional approach he doesn’t see the continent as important on the agenda.”   

Tariffs 

That transactional approach is evident in Trump’s desire to protect the US aluminium and steel industries from foreign – particularly Chinese – competition. On 8 March, the President signed an order to impose a 25% tariff on imports of foreign steel and a 10% tariff on aluminium, a move which dismayed South Africa’s long-established aluminium industry, the world’s 13th largest producer in 2016. Soon after the order, the US compounded South African woes by declining to list Pretoria among a group of strategic partners – including the European Union and Canada– which were given exemptions. The US government announced on 31st May that those exemptions would in any case be brought to an end. 

While the economic impact is likely to be somewhat muted – South African aluminium accounts for around 2% of the US market and companies can lobby for individual exemptions – South African trade and industry minister Rob Davies has argued that job losses are a possibility and suggested moving to a quota system.

Yet a more significant danger could lie in any South African attempt to retaliate against the tariffs. As a member of the African Growth and Opportunity Act (AGOA) – a flagship Clinton-era scheme to boost trade ties with the continent – South African exporters enjoy tariff free access to several US market sectors. Trump signed a modernisation act to boost AGOA in April and unveiled Power Africa 2.0 in March – moves suggestive of an endorsement of Africa trade. But South Africa almost lost its membership of the scheme under Obama following attempts to crack down on US poultry imports in 2016.

Economist Dawie Roodt believes that any attempt to retaliate against US tariffs could be met with a similarly harsh response. “If South Africa doesn’t start to play by the rules of the US there’s a possibility that other bad things could happen. If we make much of a noise here and want to retaliate there’s a good chance that Trump could say you guys are not part of AGOA anymore. That sort of price would not be worth paying.” 

UN tension 

It is not only in the commercial sphere that relations between the two nations are troubled. In March, US Ambassador to the UN Nikki Haley proposed cutting aid for countries that do not side with the US at the UN. The US’s UN Voting Practice report for 2017 placed South Africa – alongside traditional US foes Syria, Cuba and Iran – amid the 10 countries least likely to vote with the US. Punitive action could potentially put up to $500m of US foreign aid for South African health, education and SME development at risk.  

One of the biggest sources of contention is the countries’ differing interpretations of the Israel–Palestine conflict. In May, South Africa pulled its ambassador out of Israel following the killing of dozens of Palestinian protesters by Israeli troops, and the ANC has deplored Trump’s decision to move the US embassy to
Jerusalem.

Yet the divergent voting records also highlight how South Africa is increasingly looking east for its future alliances. According to the Observatory of Economic Complexity, China eclipsed the US as the largest buyer of South African goods with $6.18bn in 2016, and South Africa imported over $12bn of Chinese goods in return.  

“South Africa has shifted to the left ideologically so we are a bit further away from the West –  we are part of the Brics and we dumped Taiwan in favour of China. Economically we’ve also shifted away from the West to some extent,” says Roodt.  

While such economic alliances are increasingly reflected in South Africa’s UN voting record – particularly its support for the ideology of non-interference in sovereign nations – historically strong commercial and political relations with European nations persist and are unlikely to be impacted by the US’s shifting stance towards South Africa.   

Given the relative strength of relations with China and Europe, South Africa may be relatively unconcerned with cooling ties to the United States, viewing Trump – and his failure to appoint an ambassador – as driven more by apathy than animus.   

 “In the grand scheme of things, South Africa is still a small fish in terms of the US agenda. In that sense, especially with the tariffs, South Africa is collateral damage… I don’t think the overall significance will be that great [for South Africa]” says Markowitz. 

“The best they can do is stay out of the spotlight. Don’t unnecessarily provoke the Americans,” cautions Roodt. 

David Thomas

Rate this article

Author Thumbnail
Written by David Thomas

David Thomas is chief features writer at African Business Magazine. He has also been published at the Financial Times, the Wall Street Journal and South Africa's Cape Times.

Related Posts


Warning: mysqli_query(): (HY000/1030): Got error 28 from storage engine in /home/africanb/public_html/wordpress/wp-includes/wp-db.php on line 1924

Warning: mysqli_query(): (HY000/1030): Got error 28 from storage engine in /home/africanb/public_html/wordpress/wp-includes/wp-db.php on line 1924

Join our mailing list

If you would like Independent, Informative and Invaluable news analysis on the African continent, delivered straight to your inbox, join our mailing list.

Help us deliver better content