The African Growth and Opportunity Act (AGOA) introduced in 2000 with the promise of boosting African economies by providing tariff-free access to US markets is facing threats under US President Donald Trump.
South Africa stood out among the nations poised to benefit due to its industrialized economy and historical trade connections with the United States.
The Trump administration has signaled a potential cut to all US aid to South Africa following the passage of a contentious land reform bill. Trump views this legislation as a risk to the country’s white minority, who own the majority of farmland.
Adding to the tensions, Washington has taken issue with South Africa’s role in leading a case at the International Court of Justice (ICJ) accusing Israel of “genocidal” actions in Gaza — allegations Israel has denied. Republican lawmakers have urged Trump to respond forcefully, including reconsidering South Africa’s AGOA eligibility.
Furthermore, Trump supporters have criticized South Africa for allegedly yielding to Chinese pressure to relocate Taiwan’s de facto embassy from Pretoria. These diplomatic tensions have cast a shadow over South Africa’s continued participation in AGOA, which is reviewed annually and ultimately depends on the US president’s approval.
Even before Trump’s presidency, concerns loomed over South Africa’s AGOA standing due to its BRICS membership and increasing economic alignment with Russia and China. “South Africa should prepare accordingly to not continue forming part of AGOA,” warned Chris Hattingh, executive director at the Centre for Risk Analysis.
South Africa is already feeling the effects of Trump’s foreign policy shifts. The restructuring of the US Agency for International Development (USAID) has left thousands of South Africans in limbo, particularly those employed in health and humanitarian programs.
While the Trump administration justifies USAID cutbacks as cost-saving measures, AGOA itself has long been criticized for favoring American interests. Critics argue that the agreement primarily facilitates the export of raw materials from Africa to the US rather than fostering industrial development.
Chris Hattingh warned that even if AGOA were to be renewed in some form, stricter conditions might be imposed, particularly in sectors like agriculture and automotive manufacturing. Trump has been vocal about imposing reciprocal tariffs, particularly targeting steel and aluminum imports, which could deal a significant blow to South African exporters.
Automotive Industry at Risk
AGOA has played a crucial role in expanding South Africa’s automotive sector, which houses seven major car manufacturers: BMW, Ford, Isuzu, Mercedes-Benz, Nissan, Toyota, and Volkswagen. Under AGOA, vehicles exported from South Africa to the US enter tariff-free, making motor vehicles the country’s second-largest export to the US, valued at $1.88 billion in 2023.
Billy Tom, head of the Automotive Business Council, warned that South Africa’s exclusion from AGOA could devastate its auto industry. “It would be sending a message to the continent because if you think of the role South Africa plays in AGOA, it’s quite big,” he said.
Currently, 86,000 South Africans are directly employed through AGOA-related industries, while an estimated 125,000 others work in supplier and subcontracting roles. The total automotive export industry was valued at nearly €1.2 billion last year.
Despite the risks, some analysts argue that South Africa’s economic relationship with the US remains significant. The US is South Africa’s second-largest trading partner, and nearly 600 American companies operate in the country.
Daniel Silke, director of the Political Futures Consultancy, believes South Africa’s current standoff with the US serves as a wake-up call.
“Our internal policies need to be better handled and there needs to be better communication. South Africa will now have more scrutiny on our domestic policies than we’ve had since the days of apartheid.”
However, he pointed out that American businesses have vested interests in South Africa.
“South Africa remains critically important from an African continental point of view. President Ramaphosa is the G20 for the year, that’s an important position. And South Africa is an entry point into the African continent for many US businesses as well.”
Trade between the two nations has seen consistent growth, with US exports to South Africa reaching nearly $5.8 billion in 2024, while South African exports to the US hit $14.7 billion, with platinum being the most valuable commodity.
As South Africa navigates these geopolitical headwinds, its future within AGOA remains uncertain. Whether Trump decides to renew or scrap the trade deal, South Africa may need to rethink its trade strategy to secure economic stability.
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