On 2 November the United States said it intended to end South Africa’s duty-free access under the African Growth and Opportunity Act (AGOA) from 1 January 2027.
President Donald Trump’s letter to President Cyril Ramaphosa, dated 28 October, gives three grounds. They are weak progress against corruption and bribery, barriers to American trade and investment, and South Africa’s cooperation with governments that Washington regards as a risk to its national security.
The data do not support the contention that this is a disaster. AGOA exports were worth about US$1.7bn (roughly R28bn) in 2025, down from US$4bn (roughly R66bn) in 2024. That is roughly 1% of total exports. About 89% of what South Africa sells to the US already enters on ordinary terms, and bilateral trade reached US$28.8bn (about R479bn) last year.
AGOA is a preferential tariff, so losing it does not close the American market. Goods still enter, but they pay the standard duty, known as the Most Favoured Nation rate. The average amount of that duty is around 3.4%. Separately, the US charges 25% on cars and parts and up to 50% on steel and aluminium. That remains the reality, whether or not South Africa remains in AGOA.
Some firms and sectors will feel the AGOA loss more sharply than others. Car plants in the Eastern Cape and fruit and nut growers in the Western Cape sell into a market where Chilean, Peruvian, and Mexican competitors have their own preferences. When margins are thin and consumers under pressure, a few percentage points can decide a contract. Those firms under most macro pressure will cut shifts first.
The larger potential damage to South Africa is a signal to other trading partners and potential investors.
A formal American finding on corruption and national security is something to which investors and other governments will pay attention. South Africa’s relationship with the world’s biggest economy has soured quickly; the decline in the strategic relationship says something about South Africa’s place and role in the region, as well as on the global chessboard. Further American measures are possible, and nothing suggests this AGOA decision is the last.
Foreign policy tool
Rwanda was named in the same announcement, which suggests Washington is using AGOA as a foreign-policy tool and not only as a trade instrument.
This is an ongoing development that the CRA has highlighted in its analysis, commentary, and risk advisories throughout the second Trump administration. Economic, trade, and investment talks and decisions are no longer confined to purely economic grounds. South Africa has 60 days to respond, and the trade barriers on the American list are a fair place to start talking.
Trade and industry minister Parks Tau has said government will support the affected sectors. With an expected and normal reaction, it will not fix what makes South Africa an expensive and risky place to manufacture and produce.
The past two weeks in Gauteng show what that looks like.
On 23 October, Rand Water said it would restrict supply to municipalities that exceed their allocated volumes, naming Johannesburg and Tshwane among them. In September, Johannesburg used 1,724 megalitres a day against a target of 1,528, and Tshwane used 893 against 752. Johannesburg Water’s own bulletins then listed reservoirs and towers across Sandton, Randburg and the inner city as critically low or empty.
In Tshwane, residents were told to expect low pressure and intermittent supply. In Bronkhorstspruit, water went unchlorinated for about three weeks, and at least 433 people fell ill. A factory, a hotel or a food processor cannot plan around that. No subsidy can switch on the water.
The money goes out
The same applies to electricity, ports, rail, and policing. A support payment to a car plant that loses production days to freight delays only covers the loss. Protection for an industry that cannot compete on cost raises prices for every company that buys its products. The money goes out, the number of job opportunities continues to decline, and the same firms ask for more next year.
The government should also be careful about how it explains the next few years. AGOA is worth about 1% of exports, and it has not even been withdrawn yet. Treasury cut its 2026 growth forecast to 1.2% from 1.6% in the Medium-Term Budget Policy Statement on 21 October, before any American tariff change took effect. Official unemployment stood at 33.6% in Q2 of 2026, and it has been high for well over a decade.
In 2025, real GDP per capita was lower than in 2008. Fixed investment persists in the 13% to 15% range, while other emerging market competitors achieve between 20% and 25%.
If weak growth and job losses in 2027 are put down to the loss of AGOA, investors will see through it. It would also let the real causes off the hook.
The causes behind South Africa’s economic decline are within the state’s control to change. Investment follows reliable infrastructure, safe streets, and a state that does its job. Property rights are protected, and affirmative action policies are geared to benefit individuals who need it, not based on whether a person or business has the necessary political contacts and influence.
Those decisions are made in Pretoria, provincial capitals, and municipal councils. Washington has no say in them.
Useful overlap
There is a useful overlap with the American complaint. Many of the barriers on Washington’s list, from red tape to weak investment protection, also hold back South African and European investors. Fixing them would help with the Americans, and most importantly at home.
Losing AGOA is a painful setback, but it is not necessarily a death knell for the South African economy.
If government spends the next 60 days negotiating and the next five years fixing water, power, logistics and policing, South Africa will be in a stronger position than it is today. If it treats subsidies, tariffs, and other forms of protectionism as the answer, the economy will not grow fast enough to create the jobs the country needs, with or without AGOA.
[Image: by Johnstocker]
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