Agoa extension buys South Africa time, but the real trade fight lies ahead

South Africa has been given breathing room, but not a free pass.

Washington’s decision to extend the Africa Growth and Opportunity Act (Agoa) until the end of December 2026 has been broadly welcomed by business and trade experts, who see it as a crucial short-term lifeline for exporters. At the same time, there is growing consensus that the country can no longer rely on Agoa alone as relations with the United States become more strained and more conditional.

A lifeline with strings attached

The US confirmed the extension this week, while making it clear that Agoa, in its current form, is up for review. American officials have signalled that a revamped version of the programme should deliver more tangible benefits for US businesses, farmers and ranchers, aligning it with broader “America First” trade priorities.

US Trade Representative Jamieson Greer said changes would follow the reauthorisation legislation, including updates to the Harmonised Tariff Schedule of the United States. He added that Washington would work with Congress over the next year to modernise the programme.

That messaging has not gone unnoticed in South Africa.

Why economists say Agoa isn’t enough anymore

Agricultural Business Chamber (Agbiz) senior economist Wandile Sihlobo said the extension was welcome, but warned that South Africa should already be planning for life beyond Agoa.

From his perspective, the smarter long-term move would be a bilateral trade agreement between South Africa and the US one that offers certainty and shields exporters from sudden policy shifts.

Sihlobo pointed out that even with Agoa in place, so-called “Liberation Day” tariffs of 30% still distort trade benefits. Without Agoa, South African exports would face tariffs closer to 33%, once standard Most-Favoured Nation rates are added.

There was some relief for agriculture, however, after the US adjusted its reciprocal tariffs and exempted certain food products, a move expected to ease pressure on exporters and American consumers alike.

Farmers look east, but not at America’s expense

Within agriculture, the mood is cautiously optimistic. Agbiz fruit desk manager Wolfe Braude said the sector welcomed newly signed phytosanitary protocols that open doors to Asian markets. But he cautioned that building demand and volumes in new destinations takes time.

South Africa’s exporters are also competing with other countries that were hit by US tariff changes in 2025, leaving the global export landscape unsettled.

Braude stressed that diversification should complement, not replace, traditional markets like the US, a sentiment echoed across farming communities, where America remains a critical buyer of high-value produce.

Automotive sector still feeling the shock

If agriculture is bruised, the automotive industry is battered.

The Motor Industry Staff Association (MISA) said the 2025 suspension of Agoa triggered a collapse in vehicle and component exports, which plunged between 55% and 80% year-on-year. Exports dropped from R26.5 billion in the first seven months of 2024 to just R9.8bn in the same period of 2025.

From August 2025, South Africa was hit with a blanket 30% tariff on vehicle exports to the US, higher than the roughly 25% paid by some competing exporters. That difference, MISA says, severely undermines competitiveness.

Politics, pressure and economic reality

Efficient Group chief economist Dawie Roodt argues that retaining access to Agoa is clearly in South Africa’s economic interest, particularly for the automotive sector. He believes government must tread carefully in international relations where US interests are involved.

Political analyst Professor Piet Croucamp, however, sees US trade policy as a lever of political pressure rather than a response to South Africa’s global alliances. He dismissed suggestions that ties with countries like Iran are a decisive factor, calling those relationships economically insignificant in global terms.

Steel exports in the crosshairs

The steel sector is also watching developments closely. Charles Dednam from the South African Steel and Iron Institute said exports from the Duferco Steel Processing plant in Saldanha and stainless steel producer Columbus are especially vulnerable. Last year, 77% of Duferco’s output, more than 100 000 tons was destined for the US market.

Relief, but no room for complacency

On social media, the Agoa extension has been met with muted relief rather than celebration. Many South Africans see it as a temporary fix that delays, rather than resolves, deeper trade challenges.

The message from business is increasingly clear: the extension buys time, not certainty. Whether South Africa uses that time to secure a more stable trade future, with the US and beyond, may prove far more important than the extension itself.

{Source: The Citizen}

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