ARTICLE
22 July 2025

Tumultuous Times – Taxes, Tariffs And Trades

E
ENS

Contributor

ENS is an independent law firm with over 200 years of experience. The firm has over 600 practitioners in 14 offices on the continent, in Ghana, Mauritius, Namibia, Rwanda, South Africa, Tanzania and Uganda.
The first half of 2025 has signalled potential turmoil for both South Africa and the global economy ahead, against a backdrop of evolving global trade dynamics and potential tariff shifts.
South Africa International Law

The first half of 2025 has signalled potential turmoil for both South Africa and the global economy ahead, against a backdrop of evolving global trade dynamics and potential tariff shifts.

Earlier this year, President Ramaphosa announced a possible increase in VAT for the first time in seven years. In a country where a large percentage of small businesses fail annually and the unemployment rate remains elevated, such an increase would have placed a heavier burden on low- to middle-income households and small business owners, eroding the consumer purchasing power. In the end, the VAT hike was successfully opposed.

On 7 July 2025, the imposition of a 30% import tariff was announced by the Trump administration for goods exported from South Africa to the United States, effective 1 August 2025. Additionally, South Africa has been warned that if it retaliates with similar tariffs, the United States will respond by adding the 30% tariff on top of any South African-imposed tariffs. The politics of this situation resemble a game of Uno where Trump takes our +4, uses an Uno reverse card, and adds +8. As we are all aware, a move like that destroys friendships, which in our reality is a trade relationship.

This strategy may cause companies in the US to be less inclined to import goods from South Africa, jeopardising a crucial revenue stream for the country and potentially plunging us into an even deeper unemployment crisis. The industries most likely to be affected by the US import tariff include agriculture (particularly citrus produce), car manufacturing, processed foods and metals. South Africa's critical mineral US exports, such as platinum, which are unique to our reserves and essential to US manufacturing, are notably exempt from this tariff. Nevertheless, an impact will still be felt within the mining sector.

In an effort to diversify our export markets and reduce dependency on the US, the government is looking at market reorientation strategies for the most affected industries. China has since emerged as a partner in our trade diversification strategy. Despite a partnership between China and Africa spanning more than 15 years, China went a step further and announced in June 2025 that they are ready to drop all tariffs on imports from the 53 African countries with which it has diplomatic relations, and South Africa is one of them. It remains to be seen whether this promising alternative will fully compensate for the loss of access to the US market

Looking inward

For our economy to truly begin growing after prolonged stagnation, a sustainable approach must be adopted. This entails supporting local businesses, encouraging the growth of small and medium-sized enterprises, sourcing renewable, ethical, and local materials, developing the agricultural sector, and prioritising local manufacturing and production over reliance on other countries for everyday items. With the agricultural industry facing some hardships, creativity is needed in order to reduce costs and maximise profitability.

Trash is treasure

Agricultural waste can be transformed into useful resources through methods like composting, anaerobic digestion, and mulching. These techniques turn waste into nutrient-rich compost, renewable energy, and soil conditioners, reducing the need for expensive fertilisers and improving soil health. Additionally, converting waste into biofuels or biochar offers alternative energy sources, while repurposing crop residues and animal waste for feed, bedding, or packaging further cuts costs. In fact, as the European Union ("EU") continues its charge to carbon neutrality by 2050, its international trade through the Green Deal, already requires industries exporting to the EU, to end reliance on non-renewable energy sources. For its very survival, the incorporation of alternative fuel sources for our export industries is a non-negotiable.

As South Africa navigates tough times, one thing is clear: the real way for our economy to get back on its feet is to focus internally on finding new markets and solutions for global climate concerns. Decisions made now will determine whether 2025 results in further hardship, or marks the beginning of a stronger and more sustainable South Africa.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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