South Africa’s removal from the African Growth and Opportunity Act (AGOA) will have a small direct effect on the economy, economists said. They warned that the bigger risk is to investor confidence and ties with the United States.
The US told Congress on Monday that it plans to end South Africa’s place in the trade programme from 1 January 2027. This will end duty-free access for qualifying South African goods.
“The bigger concern is the signal it sends to investors and the potential impact on confidence, investment and our broader relationship with the US,” said Johann Els, senior economist at PSG, according to IOL.
Els said only about 7% of South Africa’s goods exports went to the US in 2025. That came to about $16.5 billion. Of this, about $1.6 billion entered the US under AGOA preferences.
He said this is roughly 10% of exports to the US, but only 0.7% of South Africa’s total goods exports. “While the absolute numbers may look significant, the share of our overall exports directly affected is relatively small,” he said.
Els said South African goods will still be able to enter the US market. Qualifying products will lose their duty-free treatment and will face normal import tariffs. “Exports will continue, but some products will become less competitive,” he said.
Donald MacKay, founder and chief executive of XA Global Trade Advisors, said the direct effect is close to nothing. He said more than half of what South Africa sends to the US is precious metals and minerals. These goods are not covered by AGOA and do not attract tariffs.
MacKay said the country has already taken a hit from US national security duties on some products. “I don’t think we’re going to see anything looking like a jobs bloodbath,” he said.
Annabel Bishop, chief economist at Investec, also expects a limited national effect. She estimates that about half of South Africa’s exports to the US, mainly farm produce, are tariff-free.
Bishop said businesses have already responded to tariff uncertainty. She said they have changed supply chains, found other export markets and brought imports forward. She said trade between developing economies is growing by about 8%, according to the United Nations Conference on Trade and Development.
Dr Ernest van Biljon, Dean of Research at IMM Graduate School, said many exporters spent the past year or two preparing for an AGOA exit. He said they have already opened markets in other regions.
Van Biljon said trade with the US was $24.1 billion last year, compared with $55.6 billion with China. The Department of Trade, Industry and Competition puts trade with the US at $28.8 billion in 2025.
He said Europe is the obvious first choice for new markets, with total trade with the EU up 44% over five years. He said AGOA was a useful advantage, not the base of South Africa’s trade.
The US administration said South Africa’s practices do not meet AGOA rules. It pointed to barriers to American trade and investment, corruption and threats to US security and foreign policy interests.
In a statement on 2 November, the trade department said the government had offered more concessions to address US concerns. It said it was unfortunate that the US was raising new issues that were not part of talks since 2025.
The department said the government would keep pursuing trade with the US. It said it would also speed up efforts to sell to other markets, including the African Continental Free Trade Area, India, the European Union and China.
Source: this article is based on reporting by IOL. Image: IOL. Written with the help of AI and published by the Tzaneen Voice Business desk. See our Editorial Standards.
Anelisa Nkuna covers business and money news for Tzaneen Voice. Anelisa reports on the rand, fuel prices, interest rates, jobs, Eskom, Transnet, farming and company results. The aim is simple: explain what the numbers mean for household budgets, small businesses and workers in South Africa.