South Africa’s Trade Diplomacy Under Threat as US-Iran Tensions Escalate

South Africa is facing mounting pressure to navigate its trade and diplomatic relations carefully as the United States intensifies its economic sanctions against Iran. With the Trump administration’s aggressive approach, experts warn that South Africa’s trade position—and even its participation in the African Growth and Opportunity Act (AGOA)—could be in jeopardy.

US Tightens Sanctions Against Iran

The US has escalated its economic offensive against Iran, with Treasury Secretary Scott Bessent vowing to collapse the Iranian economy by cutting off its oil exports. Iran, a major Brent crude oil exporter and a member of BRICS+, is at the center of rising geopolitical tensions.

For South Africa, the fallout from these sanctions could impact its trade relations with both Iran and the US. Diplomatic ties between Pretoria and Washington have already reached historic lows, particularly after the US suspended PEPFAR funding to South Africa soon after Donald Trump’s return to office.

South Africa Faces Trade Uncertainty

According to North-West University Business School economist, Prof Raymond Parsons, the latest US measures could further complicate South Africa’s economic and diplomatic strategy.

“Trump’s adversarial approach to BRICS in general, and South Africa in particular, is now at an advanced stage. The Bessent remarks therefore inject further unpredictability into the BRICS supply chain framework, which will also have possible implications for South Africa,” Parsons said.

He warned that South Africa may need to recalibrate its foreign trade strategy, potentially leading to a degree of economic “decoupling” from the US, especially if South Africa loses AGOA benefits.

Declining Trade with Iran

Trade between South Africa and Iran has already plummeted due to international sanctions:

• SA exports to Iran (coal briquettes, perfume plants, surveying equipment) fell from $116 million (2018) to $16.5 million (2023).
• Iran’s exports to SA (tropical fruits, vegetable saps, broadcasting equipment) dropped from $31.7 million (2018) to $1.74 million (2023).

Momentum Investments chief economist Sanisha Packirisamy noted that while South Africa has reduced its reliance on Iranian crude, its BRICS membership still poses a risk to US relations.

“South Africa needs to balance its ideological standpoint with its national interests very carefully in a world where the global order is shifting,” Packirisamy said.

Could South Africa Lose AGOA?

The US Embassy in South Africa has signaled that Pretoria’s diplomatic stance could have consequences, saying:

“As long as South Africa continues to support bad actors on the world stage, the United States will stop aid and assistance to the country.”

According to Investec chief economist Annabel Bishop, South Africa faces the risk of losing its AGOA free trade access—which grants duty-free exports to the US—if it is perceived as violating human rights or supporting US adversaries like Iran.

Additionally, Trump’s recent remarks about South Africa’s land policies and “confiscation” of white-owned farms have added further strain to relations.

What’s Next for South Africa?

With the US intensifying its foreign policy stance, South Africa finds itself at a crossroads. As the country prepares to preside over the G20, it has a unique opportunity to reposition its trade and diplomatic policies to maintain global investment attractiveness.

However, the risk of trade sanctions, AGOA suspension, or increased tariffs from the US remains high, making it crucial for Pretoria to strike a careful balance between its BRICS+ alliances and Western economic interests.