Eastern Cape premier Oscar Mabuyane has described the US as an “unreliable” trade partner as the province braces for the effects of hefty tariffs set to be imposed on South Africa, saying his administration wants to refocus its trade initiatives elsewhere.
US President Donald Trump confirmed earlier in July that he would impose 30% tariffs on SA’s exports to the US from August 1.
Addressing an ANC special provincial executive committee meeting recently, Mabuyane, who is the party’s provincial chair, said the Eastern Cape should consider strengthening its relations with SA’s Brics partners and Asia to attract investors and open new markets for its products.
The Brics bloc comprises Brazil, Russia, India, China, SA, Egypt, Ethiopia, Indonesia, Iran and the UAE.
Mabuyane said the economic uncertainty created by the looming tariffs “demands a bold reconfiguration of the developmental architecture of our country and province”.
Despite his administration’s efforts to grow the ailing Eastern Cape economy, build development corridors and attract investment, “the scale of the challenge dwarfs our interventions”.
Trump announced the “reciprocal” tariffs — targeting numerous trade partners of the US — in April but suspended the measures for 90 days to allow negotiations to take place.
He has also threatened a further 10% duty on Brics countries.
The tariffs could force the closure of several Eastern Cape businesses, notably in the auto sector, and lead to substantial job losses.
Agricultural exports from the province to the US are also a huge source of revenue, underpinning many jobs.
“The auto sector is the industrial lifeblood of the province and it is under threat.
“When the sector bleeds, so do our people and the township economy more broadly,” Mabuyane said.
“A team led by [trade, industry & competition minister] Parks Tau is working around the clock to negotiate a favourable trade deal with the US government as we speak.
“We are hopeful of a positive outcome because the 30% tariffs that the US is imposing on SA products is out of line.
“The US is an unreliable partner, so we must strengthen our relations with our Brics partners and Asia.”
Though the business sector in the province supports calls for new markets to be explored, it has urged the government to mend economic relations with the world’s biggest economy.
Black Business Forum president Luthando Bara said on Friday he had noted the calls for SA to shift its trade focus.
“While the sentiment reflects a valid concern about overexposure to a single market, we caution against a reactive or binary approach that may unintentionally create new vulnerabilities.
“The current global trade environment is volatile and politically charged.
“It demands a measured, strategic response which protects national interests, while keeping SA open to diverse and sustainable trade partnerships.
“SA’s inclusion in Brics has opened doors to significant opportunities — from industrial investment and technology co-operation to export markets which are increasingly aligned with our developmental agenda.
“However, diversifying trade should not mean abandoning long-standing relationships ...
“The US remains a key destination for SA exports, a source of investment and an important global player.”
Border-Kei Chamber of Business head Lizelle Maurice said: “It is good for us to diversify, to see where there are potential new markets ... It’s time to renegotiate, reset, re-strategise.
“However, I do not think we should sever our ties with the US.”
The Eastern Cape Business Chamber’s Vuyisile Ntlabathi said it was good to establish new markets, but warned it would take time, when an immediate solution was needed.
Trump’s threatened tariffs on SA could cause the loss of about 100,000 jobs, with the agriculture and automotive sectors hardest hit, central bank governor Lesetja Kganyago said recently.
Agricultural economist Wandile Sihlobo warned that SA could not simply substitute the US market.
“There are supply chain dynamics which are built over years to export to a country.
“The second aspect is whether the other markets actually have better terms of trade and tariff arrangements.”
Daily Dispatch
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