Investor confidence in South Africa is likely to be shaken due to U.S. President Donald Trump's recent tariff threats, which have included a 25% tariff on imports from Canada and Mexico and a 10% tariff on Chinese goods. These tariffs could potentially push Canada and Mexico into recession, which may have ripple effects on South Africa's economy as well [1950d38f].
In addition to the tariffs, Trump's comments regarding land expropriation in South Africa could further harm relations between the U.S. and South Africa, adding to the uncertainty surrounding trade and investment [1950d38f]. However, there are some positive indicators for South Africa's economic outlook. Analysts predict a brighter economic landscape for 2024, driven by ongoing reforms, reduced loadshedding, low inflation, and potential interest rate cuts. Furthermore, South Africa may be removed from the Financial Action Task Force greylist by October 2025, which could enhance its investment appeal [1950d38f].
Despite these positive trends, risks remain. The potential loss of African Growth and Opportunity Act (AGOA) trade benefits could significantly impact South African exports, particularly in the textile and agricultural sectors. Additionally, the U.S. funds 18% of South Africa's HIV/AIDS programs, and any reduction in this support could have dire consequences for public health initiatives [1950d38f].
Furthermore, Trump's tariff policies could challenge multilateralism, providing opportunities for China to increase its influence in the region. As the global economic landscape shifts, South Africa must navigate these challenges while capitalizing on its improving business confidence and potential upgrades in its sovereign rating by the end of 2025 [1950d38f].