The US tariffs pose a severe threat to South Africa’s manufacturing and farming sectors, particularly in the Eastern Cape.
Government must urgently and actively manage the fallout from the US tariffs with a trade crisis committee after the US administration imposed an import tariff of 30% on goods from South Africa.
Busisiwe Mavuso, CEO of Business Leadership South Africa (BLSA), says while businesses can eventually adapt, urgent temporary support is essential. “The recently announced Export Support Desk is a welcome first step, but swift implementation of broader measures is critical.
“Government should establish a Trade Crisis Committee, modelled after successful crisis response frameworks such as the National Electricity Crisis Committee. This body, including National Treasury, business leaders and key government departments, would ensure fast, coordinated action to open new markets, provide financial support and maintain employment.”
ALSO READ: ‘It’s just gone’ – Trump’s tariffs cost SA company R750m overnight
BLSA welcomes Ramaphosa’s measures to deal with US tariffs
Mavuso welcomed president Cyril Ramaphosa’s announcement that “a number of measures” will be implemented to assist affected companies, but she points out that these measures must be put in place quickly “or we risk catastrophic collapse of manufacturing and farming businesses, particularly in regions like the Eastern Cape which has major automotive industry supply chains”.
“On the weekend, a company that builds sophisticated machinery and software for the automotive industry in the province, Jendamark Automation, said it lost contracts worth R750 million due to the tariffs.
“Jendamark employs 500 people but buys inputs from other companies that employ 3 000 people. In the Western Cape, farmers producing everything from raisins to ostrich leather also face considerable uncertainty due to the tariffs.
“Over time, companies can identify new markets and pivot to different outputs, but the short-term shocks could destroy many jobs that will never come back if we do not provide temporary support.”
ALSO READ: Tau launches urgent support measures for exporters affected by US tariffs
Export Support Desk could productively help companies with US tariffs
The first measure was announced by department of trade, industry and competition Minister Parks Tau with the establishment of an “Export Support Desk” in his department that will support companies affected by tariffs through the global network of high commissions and embassies to access new markets.
Mavuso says the desk could productively assist businesses to access new markets. “I hope it does. However, business is at the coalface every day, engaging with customers around the world, seeking new markets and looking to strike deals for our factories and farms to supply goods.
“We have a great deal of experience in understanding what makes access to a new market feasible and what frustrates it. There are many parts of the story, starting with logistics and the physical challenges of getting goods to a new location through to the trade policies of the markets we could be serving.
“A standing crisis committee, consisting of business leaders and government officials from key departments, should be established to ensure rapid information flow and coordinated efforts. I encourage the president to establish a Trade Crisis Committee that brings together business leaders and key government officials to jointly chart a path forward.”
ALSO READ: US tariff of 30% confirmed for SA but negotiations continue, president says
Trade Crisis Committee can use response tools developed for Covid-19 and unrest
Mavuso says this committee must include National Treasury. “We already have proven crisis response tools that were developed for Covid-19 and the 2021 KwaZulu-Natal unrest. These can be adapted for our current trade challenges. Temporary loan schemes and employment support programmes will be essential to prevent a jobs catastrophe as factories face closure.
“We have an excellent template to follow: the National Electricity Crisis Committee, which proved pivotal in addressing the energy crisis. This model is already being deployed through the National Logistics Crisis Committee and can be adapted for trade challenges.
“The Presidency’s coordinating role has been crucial in these examples, bringing together multiple government actors for rapid decision-making and joint problem-solving. Business and government working together will be vastly more effective than either sector attempting to navigate this crisis alone.”
