Nellie the elephant packed her trunk and left for Washington’s trade fair
The proof, as they say, is in the eating. As South Africa braces for a 30% tariff on exports to the United States (US), Jane and Joe Average are finally waking up to the fact that government’s months-long claim that ‘everything is under control’ was a blatant lie.
According to a report on Business Tech, South Africa’s failure to finalise a trade deal with the US by 1 August will result in a 30% tariff on exports from 7 August. “Despite a last-ditch attempt [by the SA government] to sweeten its offer to the US ahead of the implementation date, the Trump administration confirmed that the tariff will take effect,” the article states.
The piece goes on to confirm that President Donald Trump signed an executive order adjusting tariffs for various countries, including the 30% levy on South African goods. The order, dated 1 August, states that tariff modifications “shall be effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 00h01 Eastern Daylight Time, seven days after the date of this order.”
Public hugs and kisses for Putin
Your writer, who has been penning economic and political opinion pieces since 2007, is baffled by government’s approach to international relations. If we can share public hugs and kisses with Putin, why not cosy up to Trump? If we can celebrate Cuba, Hamas or Iran, then why not the good old US of A? And we can take this commonsense logic even further.
Since the US is the world’s largest economy, it is fair to compare it to an elephant. An old East African proverb holds that when two elephants fight, it is the grass that gets trampled. By that measure, matching egos with Trump will only hurt the South African people. But granting South Africa elephant status is a stretch. South Africa accounts for around 0.3% of the world economy, and the African continent just 3%. The US, in contrast, accounts for almost a quarter of global GDP.
A better approach would be to acknowledge that there is only one elephant in this room, and then do everything possible to keep it happy. Observers have already remarked on the contrast between South Africa’s bark and its bite, suggesting that the US’s stance has more to do with politics than economics. The US is less concerned with the trade offsets the South African delegates have offered it than with the noise South Africa is making on the international stage.
Knife-edge deal making
Respected economist Dawie Roodt is equally perplexed by how the trade tariff negotiations have unfolded. In an interview with Bronwyn Williams of Biz News, he said he was inclined to side with the Democratic Alliance’s version that government had made minimal efforts to negotiate an alternative deal. How else do you frame government’s insistence on appointing a persona non grata as special envoy to the US? “Our government waits until number 99 and then there is a mad scramble to try and make some sort of deal,” mused Roodt.
He also dismissed President Cyril Ramaphosa’s ‘we will not be bullied’ bravado. “You will be bullied, whether you like Donald Trump or not,” he said. “Trump is the strongest bully on the playground, and you do not mess with him.” The economist was concerned that the 30% tariff may be the first step in a raft of actions the US could take. Financial sanctions, for example, would be far more damaging than the trade tariffs.
Despite the media hype, the 30% trade tariff will have a limited impact on South Africa’s economy. Roodt said the worst-case scenario would see a 0.2% decline in GDP, while the South African Reserve Bank (SARB) has offered a somewhat glib estimate of approximately 100000 job losses. Williams took affront to this view, saying Biz News listeners felt the introduction of tariffs would leave serious scars. The issue, it seems, is that the domestic economy is already in a decade-long slump.
Gambling away a quarter of 2025 growth
“If our economy was growing at 5-6%, then a 0.2% contraction is nothing, but our economy is not going to reach 1% economic growth this year … meaning that the 0.2% becomes a big deal,” Roodt explained. He was vocal about who South Africans should blame for the mess, singling out the ongoing mismanagement of the economy by the African National Congress (ANC).
Commenting on government’s positioning on various international flashpoints, he said: “The reality is that if you take a certain moral position, you are going to pay a price for that; if you take international political positions, there can and will be economic fallout.” It is worth noting that South Africa could have maintained some of its moralising without destroying its relationships with the world’s largest superpower. Besides, what sense is there in claiming moral fortitude if you intend bowing and scraping to prevent censure?
The Business Tech article repeated government’s line that its “departments and officials have been trying to develop a trade package over the past few months that would be accepted by the White House to bring the rate down.” They note that the Department of Trade, Industry and Competition (DTIC) had bundled a range of trade sweeteners to placate Trump. These include importing 750-100 petajoules of liquefied natural gas for a 10-year period; simplifying US poultry exports under the 2016 tariff rate quota; and around $3.3 billion in SA private sector investments in US industries such as mining and metals recycling, to name a few.
A new world trade order
Roodt is adamant the tariff hikes will not be the last US intervention. “Trump is very, very unhappy about our international political positioning,” he said. Williams pushed the economist for what might lie ahead, asking for his views on the new world trade order that Trump was creating. His response may be unpopular, but he pointed out that Trump’s concerns over trade imbalances between the US and the rest of the world were fair. Similarly, the US President’s desire for other countries to take more responsibility for defence spending.
Roodt also made the point that the US has been carrying more than its share of the global funding of not-for-profits going back decades. “Everyone is complaining about the US funding being withdrawn, including South Africa, but nobody has stopped to thank the Americans for all the aid they have been giving to the rest of the world,” he said. However, Roodt remains a strong advocate for free trade, which he says is “good for everybody.”
Roodt concluded that the tariff battle is just one part of a much bigger global shift. While the US focuses on trade in physical goods, the real transformation is happening through tech-driven shifts towards services. These forces, he says, are reshaping the global economy in ways that no tariff can stop. “The world is going to change completely. It is going to be painful for many, but in the end, it will be good for South Africa,” he concluded.
Stumbling into a SA-US trade hell
So, as South Africa stumbles out of the AGOA circus and enters a new SA-US trade deal hell, we are reminded of the old children’s song Nellie the Elephant: “She packed her trunk and said goodbye to the circus. Off she went with a trumpety-trump, trump, trump, trump.” Only this time, the departure is not voluntary, and the sound that follows is not playful trumpeting, but a chanting of the US President’s name. With apologies to the Toy Dolls, who covered the original 1956 song.
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