Wandile Sihlobo, chief economist at the Agricultural Business Chamber of SA (Agbiz), has raised concern following the inauguration of President Donald Trump. Sihlobo indicated the US may impose up to a 20% tariff on all imports and 60% on goods from China, which could impact the South African agriculture industry.
Sihlobo said that we are essentially back in the world of tariffs and trade tension, which escalated in 2018 when the US introduced import tariffs on Chinese products, and China retaliated with import tariffs on agricultural products. “When President Donald Trump imposed tariffs on China in 2018, US soybean, maize, and pork farmers were among the most negatively affected. China switched some orders to Brazil and Argentina, which became significant soybean suppliers.”
Sihlobo added that President Trump indicated on his campaign trail that the US may impose up to a 20% tariff on all imports and 60% on goods from China. “Some of these may change in the coming days and months. Still, we don't know how China would react to tariffs, regardless of what level. However, if China retaliates as it did the last time, US soybean and maize farmers and pork producers would again be negatively affected.”
Sihlobo said that this could be seen through disruptions in global grain and oilseed prices. “The US is a significant producer, and when its grain market activity is disrupted, the impact tends to be felt globally. Moreover, US farmers could also start exploring other export markets in which they have not been present to hedge against China's risks.”
Sihlobo added that avoiding China on any global agricultural product will be hard. “China is a dominant player in the export and import of agricultural products. In 2023, China was a leading agricultural importer, accounting for 11% of global agricultural imports.”
Sihlobo said that South African farmers must closely follow the formal trade policy developments in the US. “If President Trump follows through with promises of high import tariffs on China and China retaliates, there will be volatility in global oilseeds and grain prices.”
Sihlobo said that South Africa is a small player in global grains and has undoubtedly not been a participant in the US grains and oilseed markets. “The only risk is when US farmers divert their products to South Africa's traditional markets in the Far East, further creating more competition and downward price pressures. This, too, is something we will have to monitor closely.”
Sihlobo added that he remains optimistic that there will be minimal direct impact on South Africa. “Whether the US imposes any other import tariffs that could directly affect the South African farming community remains to be seen. Beyond the US, the trade fragmentation further solidifies my previously shared view that South Africa must work to diversify its agricultural export markets.”
Sihlobo said that in a fragmented world like today, an export-oriented sector should spend more time and resources on broadening export markets and diversifying the risk. “South Africa's agriculture growth hinges on the country's success in creating as many export markets as possible.”
BUSINESS REPORT