South Africa’s unemployment rate is already a major concern, standing at 33.2% as of Q2 2025, with an additional 140,000 people losing their jobs. Now, the imposition of US tariffs on key South African exports could make things worse. Experts warn that these tariffs may drive the unemployment rate in SA even higher in Q3 2025, particularly in sectors that rely heavily on exports to the US, like automotive and agriculture.
In this article, we explore the potential effects of these tariffs, which sectors may face the most significant losses, and what steps South Africa can take to lessen the blow.
How US Tariffs Affect South Africa’s Economy
In 2025, the US imposed a 30% tariff on certain South African goods, targeting industries such as automotive manufacturing and agriculture. South Africa depends heavily on exports, with the US being one of its largest trading partners. As a result, the tariffs could severely impact industries already struggling to remain competitive.
The unemployment rate in SA is likely to rise further due to these tariffs. As companies face higher costs and reduced demand, they may be forced to cut jobs. Experts predict that the automotive and agricultural sectors are at particular risk, as they export a large portion of their goods to the US.
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Impact on Key Sectors: Automotive and Agriculture
The automotive sector is one of the most vulnerable. South Africa exports a significant number of vehicles and automotive parts to the US. The new tariffs make these products more expensive for US consumers, which could lead to decreased demand. This decline in demand could result in up to 30,000 job losses in the automotive industry alone.
Agriculture is also at risk. South Africa exports wine, fruit, and vegetables to the US, but these products may become less competitive due to the tariffs. Lower sales could lead to job cuts in farming and related industries. These sectors are crucial to the South African economy, so any job losses here could worsen the unemployment rate in SA.
Expert Opinions on the Impact of US Tariffs
Jee-A van der Linde, Senior Economist at Oxford Economics Africa, explains, “The US tariffs will exacerbate South Africa’s unemployment problems. The automotive and agricultural sectors will feel the brunt, and this will lead to more job losses in the coming months.”
Thanda Sithole, Senior Economist at FNB, adds, “The tariffs will have a ripple effect across industries that depend on the affected sectors. As companies cut back on production, we can expect job losses in areas beyond just automotive and agriculture.”
The Reserve Bank’s View
The South African Reserve Bank (SARB) has acknowledged that the tariffs will place strain on certain industries. However, SARB has noted that the overall economic impact will be modest, as the US only accounts for 7% of South Africa’s exports. Still, SARB warns that unemployment in SA could continue to rise if these industries fail to adjust quickly to the new economic pressures.
What South Africa Can Do to Mitigate the Impact
While the US tariffs pose significant challenges, there are steps South Africa can take to reduce their impact.
1. Diversify Export Markets
By expanding trade relationships with countries outside the US, South African businesses can reduce their dependence on American markets. Strengthening ties with other countries in Africa, Asia, and Europe could provide new opportunities for exporters.
2. Increase Innovation and Efficiency
South African industries, particularly automotive manufacturers, can stay competitive by investing in innovation and improving production efficiency. By adopting new technologies and processes, businesses can lower their costs and remain viable even with the new tariffs.
3. Government Support
The South African government can also play a key role. It could provide financial aid or tax incentives to affected sectors, helping businesses weather the impact of the tariffs. Negotiating with the US to reduce or eliminate the tariffs should also be a priority for South Africa’s policymakers.
4. Focus on Job Creation in Other Sectors
To balance out job losses in the automotive and agricultural sectors, South Africa can invest in other growing industries, like technology, renewable energy, and services. These sectors offer significant potential for job creation and economic growth.
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Navigating the Economic Challenges Ahead
The unemployment rate in SA remains a significant challenge, and the new US tariffs are only making things harder. Automotive and agriculture sectors, which rely heavily on exports to the US, are facing substantial job losses, which could drive up unemployment in the third quarter of 2025.
While these tariffs present a serious threat, there are steps South Africa can take to reduce the damage. By diversifying export markets, investing in innovation, and supporting affected industries, South Africa can navigate these challenges and potentially mitigate the rise in unemployment.