While Wednesday was meant to mark the beginning of a significant shift in international trade dynamics, US President Donald Trump back tracked on his sweeping tariffs he announced last week.
The US President said that he would be pausing all tariffs imposed on various nations that he announced last week, however, doubled down on China's tariffs and announced a 125% immediate tariff on the Asian nation.
This comes after China said it would impose 84% tariffs on US imports, up from 34% the finance ministry said earlier on Wednesday.
The US president said on his Truth Social network, "Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately. At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable. Conversely, and based on the fact that more than 75 Countries have called Representatives of the United States, including the Departments of Commerce, Treasury, and the USTR, to negotiate a solution to the subjects being discussed relative to Trade, Trade Barriers, Tariffs, Currency Manipulation, and Non Monetary Tariffs, and that these Countries have not, at my strong suggestion, retaliated in any way, shape, or form against the United States, I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately. Thank you for your attention to this matter!"
Local impact
South African businesses that rely heavily on exports to the American market will now have some breathing space.
When Trump announced the new tariffs last week, South Africa was placed in the category labelled “worst offenders”, placing a 30% tariff margin on the country.
While many countries across the globe mobilised in reaction to Trump's tariffs, with 50 countries approaching the White House to negotiate for lower tariffs, others such as China doubled down in protest against the American tariffs, which eventually led to further punishment from Trump on the Asian country, increasing the tariff percentage.
Closer to home, South Africa and its government adopted a wait-and-see approach as the government said it was willing to negotiate further with the US.
South Africa exports a variety of goods to the US, and as the tariff adjustments take effect, these industries are preparing for the ripple effects that could follow.
The sectors most affected will likely include agriculture, textiles, and electronics.
Old Mutual Group chief economist, Johann Els, said that from the South African perspective, direct trade exposure to the US was relatively limited.
"While US data indicates a $9 billion trade deficit (equivalent to 2% of SA’s GDP), local figures suggest a more modest $2bn gap. Precious metals, base metals and vehicles comprise the bulk of SA’s exports to the US, with precious and some base metals notably exempt from the new 31% tariff rate,"Els said.
"Imports from the US are concentrated in machinery, electrical goods and chemicals. As a result, the macro-economic impact on South Africa will likely be felt more acutely in specific industries, like agriculture and vehicle manufacturing, rather than across the broader economy."
Wall Street stocks rocketed higher Wednesday after Trump's pause announcement.
Minutes after Trump unveiled it, the S&P 500 surged 6.0 percent higher to 5,281.44, snapping a brutal run of losses over the past week.
European and Asian stock markets had earlier tumbled along with oil and the dollar as the confrontation escalated.
US bond yields had also risen amid a sharp sell-off -- a major economic red light as sovereign government debt is normally seen as a safe haven for investors in troubled times.
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