US import duties on South African tech exports cause 30% price increase pain for local startups
South Africa Faces 30% Tariff on Exports to the U.S.
South Africa is currently in negotiations with the United States to lower a recently imposed 30% tariff on certain South African exports. The tariff, which took effect on August 7, 2025, has affected a range of South African exports, making it the highest tariff rate in Sub-Saharan Africa.
The South African government has responded with a multi-pronged strategy, including continued engagement to secure a deal, diversification of exports to alternate markets, economic support for vulnerable domestic companies and workers, trade defense measures against import surges and dumping, and demand-side economic interventions.
The tariffs are expected to shave off approximately 0.2% from South Africa's economic growth projections. While some 35% of South Africa's exports to the U.S. remain exempt from these tariffs, including critical sectors like copper, pharmaceuticals, semiconductors, and energy products, the tariffs nonetheless create instability and increased costs which could impact exporting companies.
For South African tech companies, the inclusion of semiconductors among exempted goods suggests some protection for this sector from tariffs. However, the broader trade uncertainty and increased tariffs on other goods may indirectly affect tech companies by disrupting supply chains, raising costs of imported components, or reducing market access for tech-related products that do not qualify for exemptions.
Other industries like agriculture have been a particular focus in the negotiations, with measures to resolve issues around U.S. poultry and pork exports to South Africa indicating some progress on sanitary measures. Furthermore, South African firms have committed significant investments in the U.S. mining, metals recycling, pharmaceuticals, and agri-machinery sectors, aiming to solidify broader economic ties even amid tariff tensions.
Reunert, a diversified industrial group, has stated that the electrical engineering arm of the company, CBi-electric: low voltage, is negatively affected by the tariff hike. The uncertainty is already rippling through key sectors, especially the automotive and agriculture industries, with some analysts warning of up to 100,000 jobs at risk.
Negotiations remain critical to mitigate tariff impacts, with South Africa emphasizing ongoing dialogue to avoid prolonged trade disruptions and maintain strong bilateral economic ties. The South African government submitted a trade proposal on July 31 to the U.S. government with the aim of reducing or limiting the tariffs.
| Aspect | Status/Impact | |---------------------------|-----------------------------------------------------------------| | Trade negotiations | Revised South African offer submitted; ongoing discussions | | Tariff rate | 30% tariff imposed by U.S. starting August 2025 | | Economic impact | Projected 0.2% GDP growth reduction; instability in exports | | Sector exemptions | Semiconductors, pharmaceuticals, copper, energy products exempt | | Tech companies | Partial protection through semiconductor exemption; potential indirect impacts from tariffs overall | | Other industries | Agriculture progressing with sanitary measures; major investments slated in mining, pharma, agri-machinery[1][2][4][5] |
[1] Business Live [2] Fin24 [3] CGTN Africa [4] Government of South Africa [5] IOL
- Despite the exemption of semiconductors from the tariffs, the broader trade uncertainty and increased tariffs on other goods may indirectly impact tech companies in South Africa by disrupting supply chains, raising costs of imported components, or reducing market access for tech-related products that do not qualify for exemptions.
- The South African government has committed significant investments in the U.S. mining, metals recycling, pharmaceuticals, and agri-machinery sectors, aiming to solidify broader economic ties even amid tariff tensions, which could potentially stimulate innovation and technology advancements in these industries.
- In response to the 30% tariff on South African exports, the South African government has focused on cybersecurity and cloud technology as key components of its trade defense measures, seeking to minimize vulnerabilities and ensure continuity for exporting companies facing increased costs and instability.
