South Africa's Economic Future Hangs in the Balance: Deputy President Mashatile Warns of US Trade Row Consequences

South African Deputy President Paul Mashatile and former Judge President Raymond Zondo.

South African Deputy President Paul Mashatile has issued a stark warning about the potential consequences of a prolonged trade row with the United States. With the US imposing a potential 30% tariff on South African automotive exports, Mashatile emphasized that the country's economy could suffer significantly, leading to increased retrenchments and widespread job losses.

The automotive sector, a significant contributor to South Africa's economy, accounting for 22.6% of manufacturing output and 5.2% of GDP, would be severely impacted, putting thousands of jobs at risk.

Mashatile stressed that the loss of benefits under the African Growth and Opportunity Act (AGOA) would have devastating effects on South African farmers and agriculture workers. AGOA currently provides support to South Africa's agriculture and manufacturing sectors, generating around $21 billion in trade with the US. To mitigate this, Mashatile emphasized the need for South Africa to diversify its export markets, citing ongoing engagement with global powers like China, Russia, India, and European countries.

The Deputy President also highlighted the importance of intra-African trade and financial cooperation through the African Continental Free Trade Area (AfCFTA). According to Mashatile, AfCFTA is a crucial step toward reducing dependency on volatile global markets. He believes South Africa's wealth of natural resources and significant agricultural potential position it as an attractive investment destination.

South Africa faces challenges in its relationship with the US, particularly under the current administration. However, Mashatile emphasized the need for collaborative efforts to promote South Africa's interests in the US. He encouraged stakeholders to unite and support government initiatives aimed at improving diplomatic relations and mutually beneficial trade.

The Deputy President also addressed the country's progress in addressing money laundering and terrorist financing concerns, which led to its inclusion in the Financial Action Task Force (FATF) grey list. South Africa has made steady progress, addressing 20 of 22 action items, and is committed to resolving the remaining issues by June to facilitate removal from the grey list by October 2025 .

In light of these challenges, Mashatile's warning serves as a call to action for serious introspection and strategic planning to navigate the complexities of global trade and diplomacy. By diversifying export markets, promoting intra-African trade, and strengthening diplomatic relations, South Africa can mitigate the potential consequences of a trade row with the US and secure its economic future.