The decision by the Trump administration to remove South Africa from the African Growth and Opportunity Act is expected to have a “minimal impact” on the overall economy, as stated by business leaders and economists.Nonetheless, this change may result in job losses within the agriculture and automotive sectors.
Raymond Parsons, an economics professor at North West University’s Business School, highlighted on Tuesday, a day after the announcement, that “while only about 10% of South Africa’s exports to the US are currently subject to AGOA, South Africa’s exit still puts thousands of jobs at risk in these sectors.”
The government in Pretoria downplayed the anticipated consequences of this withdrawal, indicating that the trade directly influenced by AGOA is relatively minor. The news did not significantly affect South Africa’s financial markets.
“The disappointment was to a large extent anticipated,” stated Alvin Chawasema, head of fixed income at Otto1890 in Johannesburg, noting that investors have larger concerns, including the ongoing conflict in Iran.
“It could well be that markets are rationally assigning some residual probability to further negotiation.”
In any case, higher trade tariffs imposed by President Donald Trump since his return to power last year have already diminished AGOA’s significance for South Africa.
The Bureau for Economic Research commented that “much of the benefit of preferential access has already been eroded by existing US tariffs.”
Nonetheless, it cautioned that the ramifications for specific manufacturers and suppliers “may be substantial even if the aggregate impact on the economy is relatively limited.”
The loss of preferential access “exposes South African citrus exports to the applicable US rate of duty, generally between 1.5 and 2.5 US cents per kilogram,” said Boitshoko Ntshabele, CEO of the Citrus Growers’ Association of Southern Africa.
He also pointed out that exporters of certain citrus types are at a “severe disadvantage to competitors like Peru and Chile, who benefit from trade agreements as well as shorter transit times.”
Discrepancies in Impact
Business Unity South Africa, the country’s largest business organization, expressed that companies are “likely to experience weaker US demand, especially in key agricultural goods.”
However, the expected decline in sales in the US may be balanced by “deep underlying strengths.”
BUSA remarked that “in the year to August, farm and food exports to the US fell by 22%, but sales to other markets rose by 9% to $15.7 billion—an increase nearly ten times the US loss,” attributing this trend to market diversification in reaction to Trump’s policies.
“The broader commercial, economic, and investment relationship has not deteriorated, and we see the loss of preferential access in the new year as having no bearing on underlying ties.”
For automotive manufacturers in South Africa, the tariffs imposed by the Trump administration in 2025 had immediate effects, particularly for Mercedes-Benz Group AG, which has been exporting the low-margin C-Class model to the US from its Eastern Cape plant since 1997.
Data from industry groups indicate that exports from the German manufacturer’s facility dropped in the third quarter of 2025 and have yet to recover, leading the company to search for a partner to share its plant due to overcapacity.
BMW AG, which previously exported the Pretoria-manufactured 3-Series compact sedan to the US, shifted to producing the X3 SUV for different markets in 2018.
“Jobs will be lost—the last thing South Africa needs in the midst of an employment crisis,” BUSA stated. “But perspective matters: The number of jobs affected is likely to be in the range of a few thousand.”
A growing concern remains that “relations between our two governments could deteriorate further.”
