TARIFFS:  As Pretoria and Washington remain at odds, South African exporters face decisions that cannot wait for diplomacy. Prolonged uncertainty could cost customers, investment and jobs before trade preferences end…

By Joseph Sekhampu

The US government’s announcement on November 2 that it intends to end South Africa’s eligibility under the African Growth and Opportunity Act (AGOA) from January 2027 has turned diplomatic tension into a commercial deadline.

Pretoria has defended its concessions, questioned additional American concerns and emphasised alternative markets.

Although both governments have reasons for their positions, neither has established a clear path from further negotiations to restored trade certainty.

Approximately $1.7 billion (R29bn) in South African exports benefited from AGOA preferences in 2025, representing roughly 1% of the country’s global exports. This figure measures qualifying trade rather than revenue that would automatically disappear, since the consequences depend on tariffs, profit margins and customers’ willingness to absorb higher prices.

Withdrawal would not close the American market, and, although the national economy may withstand the adjustment, particular exporters and workers could face substantial losses.

These consequences are widely recognised, but a less examined difficulty lies in the relationship between the negotiations and the decisions businesses must make while awaiting their outcome.

AGOA is not a conventional trade agreement in which two governments exchange tariff concessions to secure a defined outcome. It is a preference programme with eligibility requirements extending beyond commercial market access, allowing the US government to consider governance, trade barriers, national security and foreign policy interests.

 Its eligibility reviews give American authorities considerable discretion over whether a country continues to receive benefits.

That structure matters because the US government’s objections to South Africa require different responses. Agricultural restrictions can be assessed against animal health evidence and market access rules, while corruption requires institutional reforms and credible enforcement. Foreign policy disagreements involve diplomatic choices that may not be amenable to commercial compromise. Addressing one concern therefore does not necessarily resolve another.

South Africa has legitimate reasons to regulate agricultural imports, pursue industrial development and maintain an independent foreign policy. However, legitimate objectives do not make every existing restriction defensible. Some measures may protect public health or productive capacity, while others could impose costs without demonstrable benefits. Reform should be assessed on its domestic merits rather than accepted or rejected simply because Washington demands it.

Corruption is similarly not a matter of sovereignty alone, since weak procurement controls and inconsistent enforcement damage South African institutions regardless of American preferences. Stronger accountability would serve domestic interests even if it did nothing to restore AGOA eligibility.

The South African government maintains that it has offered concessions beyond its earlier commitments and that the American administration has raised additional concerns during negotiations that began in 2025. These claims deserve scrutiny: an offer is not necessarily sufficient merely because it has been made, and bilateral concessions cannot guarantee AGOA eligibility. However, the announcement identified broad categories of concern without specifying which South African actions were decisive.

The South African government must weigh the domestic costs of further concessions without knowing whether they would materially alter Washington’s decision. American authorities, meanwhile, must assess eligibility against requirements that cannot necessarily be satisfied through trade negotiations alone. Uncertainty may therefore persist even as both governments continue to engage.

For businesses, the consequences begin before withdrawal takes effect. An exporter considering a supply contract with an American customer must calculate future tariffs and the profitability of additional production, while an investor contemplating expansion must assess demand over several years. Neither can postpone every decision until the governments reach agreement.

A known tariff increase can be incorporated into commercial calculations, although it may still make production uncompetitive. An uncertain tariff regime creates a different problem: businesses must prepare for several possible outcomes without knowing which will materialise. Some may delay expansion, shorten contracts or reconsider their exposure to American customers. These responses can begin before preferences are withdrawn.

Plan for a future

The government’s diversification efforts are important but cannot immediately replace predictable access to an established market. New opportunities do not automatically translate into customers, commercial relationships or comparable profit margins, and businesses differ in their capacity to adjust. Those with limited financial reserves may be less able to wait for alternative markets to develop.

The US government also faces a question about effectiveness: its legal authority to withdraw preferences does not establish that doing so will change the conduct it opposes. Economic pressure may impose costs on exporters and workers without resolving the underlying disagreements.

For South Africa, the corresponding responsibility is to distinguish policies worth defending from those warranting reform, while explaining how affected businesses and workers will be supported. This does not require abandoning legitimate principles for market access, but it does require recognising that the economic consequences of defending those principles are borne unevenly.

The unresolved problem is therefore not simply whether South Africa can survive without AGOA, but whether negotiations covering fundamentally different disputes can deliver the predictability on which trade depends. Governments can continue negotiating without a clear endpoint, while businesses cannot indefinitely postpone decisions about customers, investment and employment.

The longer the talks continue without a credible prospect of resolution, the more businesses must plan for a future without AGOA preferences.

If an agreement eventually comes, there is no guarantee that all the customers, investments and jobs it was meant to protect will still be there.

Professor Joseph Sekhampu, chief director of the North West University Business School

Comment

Public land must serve the poor

The South African Human Rights Commission deserves support for challenging Cape Town’s disposal of municipal land amid the need for affordable housing. Its intervention asks whose interests public property should serve when the market leaves poorer residents behind. The commission wants the courts to halt further steps towards selling and transferring 49 auctioned properties while the decisions undergo review. It argues that affordable housing needs were inadequately considered and enforceable housing conditions omitted. These allegations await determination, but they demand answers.

Cape Town says the auction included 28 residentially zoned properties, alongside commercial and industrial opportunities. It argues that land sales support jobs, infrastructure and services, and points to a separate affordable housing programme. Those explanations deserve consideration. Yet, residential zoning does not guarantee affordability. A development can increase housing supply while remaining beyond the means of cleaners, security guards, shop assistants and unemployed families. Nor should municipal land be treated principally as a source of revenue. Its value includes the opportunity to build communities closer to employment, transport and public services. Once sold without appropriate safeguards, that opportunity may become harder and more expensive to recover. The city need not accept that every auctioned property suits social housing. It should, however, demonstrate why suitable land cannot advance that purpose.

WHERE IS CIVIL SOCIETY?

The apparent lack of visible NGO support for this challenge is troubling. Organisations committed to housing justice should recognise the importance of examining how scarce public land is allocated. Absence from public reporting may perhaps not establish inactivity. Some organisations may be assessing the proceedings or facing resource constraints, a mere vocal support from this quarter for this cause would add for something in the end.

Where are art thou, dare we ask?

Nevertheless, this dispute warrants a stronger public response. Housing organisations, civic associations and other advocates should explain their positions, scrutinise the evidence and help affected communities participate. Silence risks leaving those with the greatest stake unheard.

The municipality’s response is disappointing. Dismissing the commission’s intervention as electioneering substitutes political accusation for engagement with a public concern. The city is entitled to defend its decisions. But a shared commitment to affordable housing should encourage dialogue, disclosure and reconsideration where necessary, rather than an instinctive closing of ranks.

The court will decide the legal questions. Political leaders must answer the moral one: what protection does their development model offer residents whom prevailing prices exclude?

Cape Town should welcome scrutiny that could improve its choices. Public land policy must offer poorer households a credible place in the city’s future, with affordability built into decisions before valuable opportunities disappear.