Illustrative Image: US President Donald Trump. (Photo: Anna Moneymaker / Getty Images) | SA President Cyril Ramaphosa. (Photo: Gallo Images / Jeffrey Abrahams) | flags (Image: Freepik) 
Hundreds of thousands of jobs and the future of South Africa’s motor manufacturing industry and agriculture rest on President Cyril Ramaphosa’s meeting with his US counterpart, Donald Trump, in Washington on Wednesday, 21 May.
It’s a high-stakes meeting, says Citi South Africa MD Gina Schoeman. She thinks it could go one of three ways, with greater risk to the downside.
“What if they don’t meet?” she says, outlining her worst-case scenario, adding that she wouldn’t put a high probability on this happening. The upside, she says, would be “a conversation that takes place formally and with courtesy. They agree on what they will negotiate on in future.” That would be a relief, says Schoeman. The best-case scenario, or what she calls “the big upside with low probability,” is if “the meeting was purely about economic issues (exports, imports, and bilateral trade agreements)”.
But the meeting is profoundly political, with efforts in Congress to review the US’s relationship with South Africa and consider sanctions against the ANC — a call that resonates with what AfriForum and Solidarity have pushed for.
“It’s the softer issues rather than the hard data. We may move a step forward and at least not take a step backward,” says Schoeman. Below are 10 charts showing what’s at stake.
1. The US is South Africa’s second-largest export destination — we sell a substantial value of manufactured exports to the US market, which is not easily replaced.
2. This is a really important chart as it shows that high-value manufactured products (essentially cars, but others too) are sold to buyers in the US, most of it under the 25-year-old African Growth and Opportunity Act (Agoa) free trade access programme. Agricultural exports are growing exponentially, so Agriculture Minister John Steenhuisen is a key member of the SA delegation — the Western Cape economy would take a body blow if it lost this market. South Africa’s strong relationship with the EU could open new markets for manufactured goods.
3. This chart shows where South Africa’s leverage lies. Critical minerals will power future economies, such as electric cars, data centres, new generation mobile phones and other devices. We sell these to the US and have reserves. “These are the things the US uses in the world,” says Schoeman, adding that critical minerals will be key to the future of Agoa. “We can negotiate on (and with) agriculture and critical minerals.”
4. This chart shows that SA falls into the group of countries where total goods trade (imports and exports) with China is larger than with the US. SA’s relationship with China is important as trade and tourism grow with this superpower. Schoeman says it may be to the US’s geopolitical advantage to retain a relationship with South Africa, which remains a gateway economy to the rest of Africa.
5. The motor manufacturing sector, based primarily but not only in the Eastern Cape, would suffer if Agoa were ended or tariffs on inputs from the US were raised so high that they cancel the impacts of the trade benefits.
6 & 7. Aid from the US to South Africa is small, as charts 6 and 7 show. With political will, South Africa should be able to replace the funds it receives largely in basic health aid and the US Aids drug programme, Pepfar (the President’s Emergency Plan for Aids Relief).
8. One of the more important relationships to protect, is that with US businesses in South Africa, as charts 8-10 show. If relations with the US are not improved, it will become increasingly difficult for US companies to do business or invest.
9. The American Chamber of Commerce in a 2021 survey confirmed that at least 662 US companies were active in SA, employing more than 220,000 people in often high-value jobs. “The US remains a critical international business partner for South Africa. The US is also South Africa’s fourth-largest foreign direct investment (FDI) source.”
The survey found that on average, companies spent more than R1-million on skills development and R50-million at the top end annually. While trading conditions were challenging (the survey occurred during Covid), they remained resilient investors.
10. It’s not easy doing business in SA, and the geopolitical shift in the relationship since Trump took office has made it even harder. While the risk to a reliable energy supply has decreased, crime is still high, and growth is low. Access to capital is slightly more manageable, while most businesses surveyed said access to land was not an insurmountable challenge. DM
