By Tarryn-Leigh Solomons
From the 1st of August 2025, the United States has imposed a 30% reciprocal tariff on a wide range of South African exports — a serious escalation in trade tensions that threatens to destabilise the country’s economy and currency markets.
The new tariffs, which override many of the benefits South Africa previously enjoyed under the African Growth and Opportunity Act (AGOA), target core export sectors responsible for employment and growth:
- Agriculture, including citrus, table grapes and wine
- Automotive manufacturing, a critical industry with established US export routes
According to South African Reserve Bank Governor Lesetja Kganyago, as many as 100,000 jobs are at risk, with the citrus industry alone potentially losing 35 000 jobs. Local economies in towns like Citrusdal and Addo, which depend on citrus exports, could be devastated.
The automotive sector is already in steep decline, with vehicle exports to the US dropping by over 80%. The outlook remains bleak.
GDP downgraded, market sentiment bruised
In response to the tariff shock, GDP growth forecasts for 2025 have been revised down to around 1.2%. Investor sentiment has weakened, and the currency has already begun to reflect the pressure.
“The rand has dropped more than 2% in early July and remains under pressure,” says Harry Scherzer, CEO of Future Forex. “It’s now hovering near historic lows of R17.75 to R17.97 against the US dollar, and we’re likely to see continued volatility as the trade deficit widens.”
Currency under pressure from both directions
The situation is compounded by the SARB’s recent interest rate cut, which, while supportive of local consumers, reduces the yield appeal of South African assets for international investors.
“With fewer dollars coming in through exports, and more needed to service global commitments, the rand is facing downward pressure from both ends of the equation,” says Scherzer.
“The rand — already a volatile currency — is now exposed to a potential downward spiral if these imbalances persist.”
Real impact for individuals and businesses
The depreciation of the rand is already having tangible effects on South Africans who need to move money internationally — whether for tuition, emigration, imports, investments, or other reasons.
“For individuals and businesses transferring funds abroad, the impact is immediate and measurable,” Scherzer explains.
“You now get fewer dollars for every rand you send, and the value of your money is directly eroded.”
The added complication, he notes, is volatility.
“Exchange rates can shift rapidly in this kind of environment. That makes timing critical and planning more complex.”
Rising cost of protection
For those using FX tools to hedge against currency swings, the cost is going up.
“The cost of hedging — whether via forward contracts or structured solutions — rises when volatility increases,” says Scherzer. “That makes it harder for businesses and individuals to manage their currency risk efficiently.”
Uncertainty reigns — but knowledge is power
While there’s still hope for diplomatic resolution, there’s no guarantee that the US will backtrack on the tariffs any time soon.
“There’s always the chance of limited exemptions or a renegotiated trade framework, but South Africa can’t afford to bank on that hope,” Scherzer cautions.
“As it stands, the tariffs appear locked in — and the economy, and currency, remain exposed.”
He adds that now more than ever, individuals and businesses must stay informed.
“In an environment like this, knowledge is power, because every market movement has a direct impact on your pocket.”
