Dr Stavros Nicolaou is a member of the South Africa BRICS Business Council who is responsible for the trade portfolio.
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South Africa must urgently pursue a new trade deal with the US to safeguard its economic interests amid rising tariffs and strained diplomatic ties, a senior business leader said, as the Trump administration’s “Liberation Day” policy threatens to unravel decades of duty-free access under the African Growth and Opportunity Act (Agoa).
Dr Stavros Nicolaou, a member of the South Africa BRICS Business Council who is responsible for the trade portfolio, said in an interview on Friday with Business Report Executive Editor Philippa Larkin that a new agreement is vital following the US imposition of a 30% tariff on South African goods, effective this Wednesday (April 9), alongside a global 10% import levy announced on April 2.
The US is key market for South Africa’s merchandise exports, having accounted for 7.7%, or R156.9 billion, of all South Africa’s exports to the world in 2024. A large portion of such exports is entering the US market duty-free under Agoa.
The measures, part of President Donald Trump’s pledge to address trade imbalances, imperil Agoa, which has enabled $14.7bn (R281bn) in South African exports - vehicles (64.2%), platinum, and citrus - to the US in 2024 alone. With Agoa’s potential renewal due in September, Nicolaou warned of an economic cliff edge.
“If Agoa is hanging by a thread, the logical thing to do here is to conclude a completely new trade deal,” Nicolaou said. “It could be just a trade deal; it could be a broader economic partnership agreement.” He underscored the interdependence of the $29.4bn two-way trade relationship, explaining, “We do need to try and work our way towards a new trade deal with the United States. The reality is that at a trade level, both countries need each other - we need the US as a market for our products, and they in return need us for critical minerals and certain critical medicines like oncology products - radioisotopes, such as molybdenum that the US imports from South Africa, amongst other goods”, he said.
The US is South Africa’s second-largest trading partner after China. In South Africa there are 601 American companies that employ tens of thousands locally.
“There are things we need from each other, and in a business sense, I think that we shouldn’t be too overly distracted by the politics, and we should look to complete a trade deal of sorts,” Nicolaou said.
South Africa can't afford to lose any trade.
While South African citizens are upset with America's new policies, Nicolaou said while this was understandable, it was important for South Africa to basically keep a level head.
"We need to ensure our people are fed, which means prioritising economic growth, poverty alleviation, and job creation. To achieve this, we shouldn’t favour or align too closely with any single region or country because we need the support of all of them. We can’t afford to discount America or China; they are the two largest economies, even if they are rivals. Therefore, we should adopt a strategy , which involves engaging with all sides," he said.
In fact diplomatic tensions between SA-US, predate Trump’s return as president, with unease over South Africa’s ties to Iran and China, its BRICS de-dollarisation rhetoric, Lady R and allegations of weapons to Russia as well as its International Court of Justice case against Israel over Gaza.
Yet, Nicolaou said South Africa must take a pragmatic approach. “It’s always going to be a more balanced trade deal now because America can argue that the duty-free dispensation for us was overly favourable to us,” he said, noting the US’s $9 billion trade deficit with South Africa in 2024. Agoa, enacted in 2000, was designed as a temporary boost, and South Africa’s sluggish 0.8% growth last year has fueled US calls for reciprocity. “There is scope and ground for us to find each other and carve out a middle path and look to conclude a trade deal of sorts,” he added.
Nicolaou advocated a data-driven strategy, leveraging South Africa’s trade surplus with the US to negotiate tariff relief. “If we’re going to a new trade deal and we say, look, we’re losing on the car manufacturing side, we need to do something to be more competitive,” he said. The automotive sector, employing 110 000 directly, faces a 25% US vehicle tariff threatening BMW and Mercedes exports.
He suggested trade-offs - perhaps minerals for tariff exemptions - given Trump’s openness to post-tariff talks, and outlined a broader plan.
“On the trade, I think the four things are: one, we’ve got to look to try and deal with the US, and we should be guided by the trade data. The second thing is we do need to diversify and strengthen our existing partnerships - the EU, for example. The third thing is we need to find new partnerships - Saudi is an example - and those partnerships should also be complementary in nature. Then the next thing is we need to stimulate our own economic growth. We need to fix the logistics, supply chain, energy supply crisis. Industrialisation is a really important thing, because if you’re going to intensify and diversify your overseas markets and also your regional integration, you do need a strong manufacturing base back home so you can export competitively. That should be the response. I’m not a great fan of retaliatory trade measures,” he said.
As Chair of the Saudi-South Africa Business Council, Nicolaou also pushed diversification, citing a recent European Union (EU)-South Africa summit and Saudi Arabia’s Vision 2030 shift from oil.
Nicolaou explained, "In our position, we need to court the West, the East, and the South. We cannot afford, in economic terms, to have a bias or be parochial to any one specific region or one country. We basically need to attract investment from the whole world, regardless of where they sit, whether it’s East, West, or South. So put differently, we need to act in the best economic interest of South Africa when we consider both our political, diplomatic, and economic relations.
Saudi’s focus on healthcare and green energy aligns with South Africa’s strengths, while the EU, also tariffed, pledged closer ties three weeks ago.
Politically, reconciliation will be slow. “The relationship is strained, and it’s going to take quite a lot of work,” Nicolaou said. Department of International Relations and Cooperation and Department of Trade, Industry and Competition talks in Washington last week yielded no firm outcomes, and he suggested that when a South African delegation is sent to America it should include an envoy of the same calibre as former minister Trevor Manuel.
On timing, he added, “How long will it take to broker something like this? It’s very difficult to say. These things sometimes surprise you and go quite quickly - it depends on how well prepared you are and how well the groundwork is done. People are saying there wasn’t a lot of science to how the tariffs were determined two days ago, but that doesn’t mean we shouldn’t know the detail and prepare the groundwork well in advance of any such type of negotiations.”
Nicolaou stressed urgency, “If we cut a trade deal, it will help the political effort as well.”
BUSINESS REPORT
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