South Africa’s currency, the rand, made a slight recovery in early trading on Tuesday after hopes emerged that the country could still negotiate a less severe trade agreement with the United States. This followed a move by U.S. President Donald Trump to extend the deadline for new tariffs on several countries, including South Africa, to August 1.
The rand was trading at 17.76 to the U.S. dollar as of 0656 GMT, gaining 0.6% after a sharp decline on Monday. The currency had fallen more than 1% the previous day after Trump issued a warning of new tariffs targeting countries he accused of aligning with “anti-American” BRICS policies.
Trump’s recent letters to more than a dozen U.S. trading partners, including South Africa, stated that sharply higher levies would soon take effect. For South Africa, this includes a potential 30% tariff on exports to the U.S., raising fears of job losses and economic impact across several key industries.
The extension of the deadline to August 1 has, however, opened a short window for diplomatic and trade negotiations. Analysts believe this extra time may offer Pretoria a chance to either avoid the harshest of the proposed tariffs or reach a compromise that will reduce the economic blow.
The U.S. is currently South Africa’s second-largest trading partner after China. Major exports from South Africa to the U.S. include minerals, car parts, manufactured goods, and agricultural products. One of the industries most at risk is citrus farming, with estimates suggesting the country could lose up to 35,000 jobs if the new tariffs are fully implemented.
Responding to the situation, the South African Presidency released a statement rejecting the 30% tariff figure, saying it does not reflect the actual trade data between the two countries. The government also said it remains committed to engaging constructively with the U.S. on trade matters and will work to prevent any measures that could harm the South African economy.
Despite the temporary boost for the rand, concerns remain. The country’s 2035 benchmark government bond showed weakness in early trading, with the yield rising by three basis points to 9.86%. This indicates ongoing investor concern over the possible impact of the tariff increase on South Africa’s economic outlook.
Trump’s tariff threat is part of a broader trade strategy targeting members and allies of the BRICS group, which includes Brazil, Russia, India, China, and South Africa. He has recently accused BRICS of pursuing policies that are “anti-American” and warned that the U.S. would impose penalties on countries that show alignment with the bloc’s direction. This has rattled financial markets and prompted diplomatic responses from several governments, including South Africa’s.
The extension of the tariff deadline provides breathing room, but analysts say that unless a meaningful breakthrough is achieved in trade talks, the country may face more pressure on its currency, exports, and employment levels. The coming weeks will be crucial for South African policymakers as they seek to protect the country’s interests in a rapidly changing global trade environment.
