Risks of Deteriorating US Relations

South Africa’s relationship with the United States has reached a critical juncture, with escalating tensions threatening billions in trade and economic stability. Since Donald Trump’s inauguration in January 2025, the US has suspended aid to South Africa over concerns about race-based laws and the controversial Expropriation Act. Combined with South Africa’s close ties to countries like Iran, Russia, and China, these tensions risk alienating one of South Africa’s most important trading partners.

The Roots of the Tensions

The strained relationship stems from several key issues:

1. Suspension of US Aid:
   The US has halted funding for programs like the President’s Emergency Plan for AIDS Relief (PEPFAR), impacting South Africa’s healthcare system.
2. Expropriation Act:
   The US views South Africa’s land expropriation policies as a threat to property rights and foreign investment.
3. Foreign Alliances:
   South Africa’s relationships with Iran, Russia, China, and Hamas have raised concerns in Washington, undermining its claim of neutrality.
4. International Court of Justice Case:
   South Africa’s case against Israel at the ICJ has further strained relations, as the US views it as aligning against its interests.

The Economic Stakes

South Africa’s trade relationship with the US is vital to its economy. Here’s what’s at stake:

• AGOA Benefits:
  The African Growth and Opportunity Act (AGOA) allows South Africa to export goods duty-free to the US. In 2023, South Africa exported $14billionworthofgoodstotheUS,with$3.6 billion under AGOA preferences. Since 2000, AGOA has facilitated $60.3 billion in exports, contributing roughly 1% to South Africa’s GDP.
• Trade Surplus:
  South Africa enjoys a R125 billion trade surplus with the US, accounting for about 2% of its GDP. Losing AGOA benefits or facing tariffs could devastate this surplus.
• Critical Minerals:
  South Africa exports critical minerals to the US, which are essential for industries like technology and defense. Disruptions in this trade could harm both economies.

Ramaphosa’s Defiant Stance

Despite the risks, President Cyril Ramaphosa has doubled down on his rhetoric. During his 2025 State of the Nation Address, he declared, “We will not be bullied. We will stand together as a united nation.” He also co-authored an article in Foreign Policy Magazine criticizing the US, Israel, and the Trump administration, further escalating tensions.

Ramaphosa has attempted to downplay the economic risks, claiming that the US benefits as much from AGOA as South Africa does. However, the numbers tell a different story. The US economy is 73 times larger than South Africa’s, making the trade relationship far more critical for South Africa.

Potential Consequences

If tensions continue to escalate, South Africa could face:

1. Loss of AGOA Benefits:
   This would immediately impact exports, particularly in sectors like automotive, agriculture, and textiles.
2. Tariffs on Imports:
   The US could impose tariffs on South African goods, making them less competitive in the American market.
3. Sanctions:
   In a worst-case scenario, the US could impose sanctions, further isolating South Africa economically.
4. Reduced Foreign Investment:
   Uncertainty over South Africa’s policies and international relations could deter foreign investors.

What’s Next?

South Africa is walking a tightrope, balancing its domestic policies and international alliances. While Ramaphosa’s defiant stance may resonate with some, the economic risks are undeniable. To avoid further damage, South Africa must:

• Engage in diplomatic efforts to address US concerns.
• Reassess its foreign policy to maintain neutrality and avoid alienating key partners.
• Strengthen trade relationships with other countries to reduce reliance on the US.

South Africa’s deteriorating relationship with the US is a dangerous game with high stakes. While standing firm on principles is important, the economic consequences of alienating a major trading partner could be devastating. As tensions escalate, South Africa must carefully navigate this complex landscape to protect its economy and global standing.

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