On the evening of 2 November, the US administration announced its intention to terminate South Africa (SA) and Rwanda’s eligibility for the African Growth and Opportunity Act (AGOA), effective from 1 January 2027. The decision follows an eligibility review by the Office of the United States Trade Representative (USTR), with the White House citing barriers to US trade and investment, corruption concerns, and practices it considers inconsistent with US national security and foreign policy interests as justification for the move.
SA has historically been the largest beneficiary of AGOA, accounting for approximately 54% of all AGOA-related exports to the US since the programme’s inception. Despite this, the immediate financial market reaction has been relatively muted. Investors have increasingly viewed SA’s exclusion as a possibility amid deteriorating diplomatic relations with Washington.
The direct economic impact is likely to be relatively contained, given SA’s limited overall dependence on the US export market. SA Reserve Bank (SARB) data show that the US absorbs only between 7% and 8% of SA’s total global merchandise exports, suggesting that the economy-wide impact of the decision is limited.
From a trade perspective, the withdrawal of AGOA benefits will increase the tariff burden on qualifying SA exports. However, the extent will vary by product, and it does not alter SA’s existing exposure to US reciprocal tariffs. AGOA provides duty-free access for eligible products by waiving the applicable US Most-Favoured-Nation (MFN) import duties. However, it does not necessarily exempt these products from separate reciprocal tariffs introduced by the US in April 2025. For example, products currently facing a reciprocal tariff of 12.5% will, from January 2027, also be liable for the relevant MFN duty. Assuming an average MFN tariff of approximately 3.4%, this would increase the combined effective tariff burden to around 15.9%. Actual rates will depend on individual product classifications and any other applicable tariff measures.
The impact is therefore likely to be concentrated in those sectors where MFN tariffs are materially higher than average and where exporters are particularly reliant on preferential market access. These include automotive components and vehicles, citrus and other fresh fruit, wine, jewellery and ferroalloys. For these industries, the loss of preferential access could erode competitiveness, particularly where exporters are unable to fully pass the additional costs on to US consumers without losing market share.
That said, local exporters have already demonstrated resilience under a more restrictive trade regime. Agricultural exports to the US faced reciprocal tariffs of approximately 30% during 2025, yet exports totalled roughly US$504mn, only 3% lower than the previous year. This suggests that strong product demand, established supply chains and limited substitution options can partially offset the impact of higher tariffs.
Overall, while some export sectors will face a more challenging operating environment, SA’s limited dependence on the US market and exporters’ demonstrated ability to adapt suggest that the aggregate economic impact will be modest. The longer-term significance is likely to depend less on the immediate tariff increase and more on whether the suspension marks a further deterioration in bilateral trade and investment relations between SA and the US.
