WIM NAUDÉ and MARTIN CAMERON: How SA can beat Trump at his tariff war

President Donald Trump’s announcement of the “Liberation Day” tariffs on April 2 sent shock waves through the global economy, and SA finds itself squarely in the crosshairs of this unprecedented trade offensive.

These sweeping “reciprocal” tariffs, affecting imports from more than 180 countries and ranging from a baseline of 10% to a staggering 54% (upped to 104% and then 125% at the time of writing) for nations such as China, mark a historically significant rupture with decades of established trade norms. From April 9 a 30% tariff has been slapped on all goods from SA entering the US, suspended the next day for 90 days. 

As the graphic shows, the US represents 8%-9% of SA’s exports in recent (average 2023 and 2024) value terms and the reciprocal tariffs are expected to have a significant negative effect on SA’s exports — if and when they kick in, and if the country does not respond appropriately.

The US has excluded certain commodity groups, valued at almost 58% of the average (2023-24) export value from SA to the US. These products were not excluded out of pity for SA, but rather at the convenience of the US economy due to its dependence on these products, which include platinum group metals (PGMs), gold, copper, pharmaceuticals, semiconductors, lumber articles, certain critical minerals and energy products.

Many uncertainties about the implementation of the announced tariffs, duration and legalities thereof have been created by the way in which the process and announcements have been conducted. These tariffs and the uncertainties about them are not merely the impulsive actions of an unpredictable leader. They are part of a deliberate, strategic move to fundamentally reshape the global trading system in favour of the US and its oligarchs.

By providing the world with the dollar as reserve currency the US has increasingly run trade and budget deficits as the demand for dollars increases irrespective of US economic fundamentals. It now faces a trade deficit of more than $1-trillion and has a government debt of $36-trillion. The global trade system is unsustainable from the US’s point of view. 

Whereas the first phase of this “master plan”, as described by economist and former Greek finance minister Yanis Varoufakis and explicitly outlined in 2024 by Stephan Miran, chairperson of Trump’s economic advisers, involves  the levying of unprecedented tariffs, the second phase consists of individual economic coercion through bilateral negotiations. For SA, this stage is likely to extend beyond purely economic demands.

Given the current geopolitical landscape, the US is likely to use its economic leverage to pressure SA on security-related matters. This could include demands to reconsider its stance on the International Court of Justice case against Israel, to lessen its co-operation with other Brics nations such as China and Russia, and to provide unfettered access to American companies such as Elon Musk’s Starlink.

SA cannot afford a passive response, nor delay putting a comprehensive export strategy in place. A multipronged export strategy, drawing on lessons from game theory and historical precedents, offers the best path forward to navigate this turbulent period and ultimately safeguard its long-term economic interests. It should consist of various simultaneous measures and pathways. 

The first of these is that SA must use expansionary monetary policy over the short term to stimulate the local economy and increase the competitiveness of its exports. Lowering interest rates now will be a good move. It will weaken the rand, compensating for the effects of the US tariffs, and stimulate the domestic economy. 

The second, and perhaps more important, is to restrict exports of the critical and excluded minerals. The US tariffs appear to have excluded certain critical minerals. SA, possessing significant reserves of such materials (such as the PGMs required by companies such as Tesla), could strategically consider imposing export restrictions on these goods. This would leverage SA’s market power in specific sectors — similar to what China did in its 2018 trade war with the US, which led to the US relenting. That China has already begun restricting its exports of these critical minerals to the US provides SA with extra leverage. 

SA should also urgently lodge a dispute with the World Trade Organisation (WTO). While the WTO’s effectiveness has been questioned, particularly by the US, it provides a platform to challenge the legality and fairness of the tariffs under international trade rules and garner international support. This was the route taken by the EU in its 2018 dispute with the US. After April 2, China has already lodged such a dispute. 

SA must also accelerate its efforts to diversify its exports away from the US. Strengthening trade ties with other Brics+ nations, the EU and emerging economies in Asia and Africa is essential to mitigate the impact of US tariffs and build resilience in a fragmented global economy. SA has the tools to identify realistic alternative export markets to replace those that may be lost in the US. 

SA should hint at, and consider, targeted reciprocal tariffs. However, game theory suggests that on its own SA cannot win a tit-for-tat tariff war with the US due to the asymmetry in the countries’ exposure to one another. However, if SA can co-ordinate a response with other countries the cost to the US of maintaining its tariffs will be more significant. 

All four of the responses as an anti-Trump tariff playbook will strengthen SA’s negotiating position with Washington. We should not be naive though. The Trump administration will try to apply financial and economic coercion to the maximum — it is also likely to threaten the country with financial sanctions. It has already started down this road by stopping aid transfers to SA as well as other countries in need.

SA must be careful to walk the tightrope between being willing to negotiate with US — without being seen to capitulate or to allow US interference in the country's domestic affairs — and abandoning its moral fight against Israel’s plausibly genocidal behaviour and apartheid-like policies. Negotiations with Trump without holding any cards would end up being disastrous for SA. 

The motivations behind the US’s protectionist shift are deep-seated, rooted in concerns about dollar overvaluation, persistent trade deficits and a desire to reassert economic dominance in a changing global order. Even if the current tariffs are postponed for longer than 90 days, are diluted or altered in some way in future, which is highly likely given the financial sector’s backlash in the US and the costs imposed by Chinese retaliation — factors that have already caused Trump to retreat — the underlying pressures driving the US towards a more unilateral and coercive trade policy are unlikely to dissipate entirely.

SA needs to move fast and with agility to strategically position itself in the newly emerging world order.

• Dr Naudé is visiting professor in technology, innovation, marketing & entrepreneurship at RWTH Aachen University in Germany; distinguished visiting professor at the University of Johannesburg; and a fellow of the African Studies Centre at Leiden University in the Netherlands. Dr Cameron, a quantitative economist, is MD of Trade Research Advisory, a company that was spun out of North West University.