University of Johannesburg economist Peter Baur says the 25% US tariffs on SA steel and aluminium exports would lead to increased costs and this would in turn hurt businesses, lead to job losses, and strain the broader economy.
US President Donald Trump said the tariffs would apply to imports of the metals from all countries.
Baur emphasised the need for SA to diversify trade relationships.
Sowetan: How do Trump’s tariffs impact SA steel and aluminium exports?
Baur: These tariffs add a 25% cost to SA exports, making them more expensive for American buyers. If a ton of steel originally cost 10 grand, the US government now collects an extra 250 per ton, increasing prices. US companies either absorb the cost, cutting profits, or pass it to consumers, raising prices on cars, appliances, and other goods.
Sowetan: What does this mean for SA businesses and workers?
Baur: It creates major challenges. With reduced exports, SA production slows down, leading to job losses, particularly in the mining and manufacturing sectors. Workers with specialised skills may struggle to find new jobs, worsening unemployment. Some sectors, like gold mining, might benefit from rising global gold prices, but overall, the economy takes a hit.
Sowetan: What impact do these tariffs have on the broader economy?
Baur: Tariffs create ripple effects beyond just trade. For SA, losing the US as a major trade partner means reduced foreign income, affecting our economy. The government must now find new trade relationships such as with the European Union, China and other Brics nations, to compensate for lost revenue. This shift won’t happen overnight, meaning a short-term economic slowdown is likely.
Sowetan: What should SA’s response be to these economic challenges?
Baur: The government must focus on strengthening trade relations with other regions, particularly within Africa, Brics nations, and European markets. African trade blocs like SADC and the African Union provide opportunities for regional growth, but we must ensure fair trade agreements that protect local economies.
At the same time, diplomatic engagement with the US remains crucial. While Trump’s policies are disruptive, cutting ties with America entirely would be damaging. Negotiating favourable trade deals while diversifying our markets is the best approach.
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The Quick Interview | US tariffs likely to hit SA jobs very hard
Image: REUTERS/CARLOS BARRIA
University of Johannesburg economist Peter Baur says the 25% US tariffs on SA steel and aluminium exports would lead to increased costs and this would in turn hurt businesses, lead to job losses, and strain the broader economy.
US President Donald Trump said the tariffs would apply to imports of the metals from all countries.
Baur emphasised the need for SA to diversify trade relationships.
Sowetan: How do Trump’s tariffs impact SA steel and aluminium exports?
Baur: These tariffs add a 25% cost to SA exports, making them more expensive for American buyers. If a ton of steel originally cost 10 grand, the US government now collects an extra 250 per ton, increasing prices. US companies either absorb the cost, cutting profits, or pass it to consumers, raising prices on cars, appliances, and other goods.
Sowetan: What does this mean for SA businesses and workers?
Baur: It creates major challenges. With reduced exports, SA production slows down, leading to job losses, particularly in the mining and manufacturing sectors. Workers with specialised skills may struggle to find new jobs, worsening unemployment. Some sectors, like gold mining, might benefit from rising global gold prices, but overall, the economy takes a hit.
Sowetan: What impact do these tariffs have on the broader economy?
Baur: Tariffs create ripple effects beyond just trade. For SA, losing the US as a major trade partner means reduced foreign income, affecting our economy. The government must now find new trade relationships such as with the European Union, China and other Brics nations, to compensate for lost revenue. This shift won’t happen overnight, meaning a short-term economic slowdown is likely.
Sowetan: What should SA’s response be to these economic challenges?
Baur: The government must focus on strengthening trade relations with other regions, particularly within Africa, Brics nations, and European markets. African trade blocs like SADC and the African Union provide opportunities for regional growth, but we must ensure fair trade agreements that protect local economies.
At the same time, diplomatic engagement with the US remains crucial. While Trump’s policies are disruptive, cutting ties with America entirely would be damaging. Negotiating favourable trade deals while diversifying our markets is the best approach.
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