JOHANNESBURG, Nov 3 – The United States’ decision to exclude South Africa from the African Growth and Opportunity Act (AGOA) is expected to have a limited impact on the country’s broader economy, although exporters in the agricultural and automotive industries face weaker access to the US market and potential job losses.
According to a Bloomberg News report, Business leaders and economists said the direct exposure of South Africa’s exports to AGOA preferences is relatively small. However, the removal of preferential access could place thousands of jobs at risk in sectors that depend on exports to the United States.
“While only about 10% of South Africa’s exports to the US are currently subject to AGOA, South Africa’s exit still puts thousands of jobs at risk in these sectors,” Raymond Parsons, an economics professor at North West University’s Business School, said on Tuesday, a day after the decision was announced.
Pretoria has played down the likely economic consequences, pointing to the relatively small share of trade directly affected by the decision. South African financial markets also showed a limited immediate reaction.
Alvin Chawasema, head of fixed income at Johannesburg-based Otto1890, said the outcome had largely been anticipated by investors.
“The disappointment was to a large extent anticipated,” Chawasema said, pointing to broader investor concerns, including the ongoing Iran war. He added that markets could be assigning some residual probability to further negotiations between the two governments.
Existing US tariffs had already reduced AGOA benefits
The removal of preferential access comes after higher trade levies imposed by President Donald Trump since his return to power last year had already diminished AGOA’s value for South African exporters.
“Much of the benefit of preferential access has already been eroded by existing US tariffs,” the Bureau for Economic Research said in a note.
However, the research organisation warned that the consequences for certain manufacturers and suppliers “may be substantial even if the aggregate impact on the economy is relatively limited.”
The citrus industry is among the agricultural sectors facing additional pressure. Without AGOA preferences, South African citrus exports will be subject to the applicable US duties.
“The loss of preferential access “exposes South African citrus exports to the applicable US rate of duty, generally between 1.5 and 2.5 US cents per kilogram,” said Boitshoko Ntshabele, chief executive officer of the Citrus Growers’ Association of Southern Africa.
Ntshabele said exporters of certain citrus varieties would face a “severe disadvantage to competitors like Peru and Chile, who benefit from trade agreements as well as shorter transit times.”
Export diversification provides some support
Business Unity South Africa (BUSA), the country’s largest business lobby group, said companies were likely to experience weaker demand from the US, particularly for key agricultural products.
However, it argued that stronger sales in other markets could help offset some of the losses.
“In the year to August, farm and food exports to the US fell by 22%, but sales to other markets rose by 9% to $15.7 billion, an increase nearly ten times the US loss,” BUSA said in a statement.
The organisation attributed the shift to market diversification by South African exporters in response to changes in US trade policy.
“The wider commercial, economic and investment relationship has not deteriorated, and we see the loss of preferential access in the new year as having no bearing on underlying ties,” BUSA added.
The figures suggest that alternative export destinations have become increasingly important for South African agricultural producers as trade conditions in the US change.
Automotive industry faces additional pressure
South Africa’s automotive industry also faces potential consequences from the loss of AGOA access, although manufacturers have already been dealing with the effects of US tariffs introduced in 2025.
Mercedes-Benz Group AG has been among the manufacturers affected. The German automaker has exported its C-Class model to the US from its manufacturing facility in South Africa’s Eastern Cape province since 1997.
Exports from the plant slumped in the third quarter of 2025 and have not recovered, according to industry body data. The decline contributed to the company seeking a partner to share the facility amid excess production capacity.
BMW AG, which historically exported its Pretoria-built 3-Series compact sedan to the US, shifted production towards the X3 SUV for other markets in 2018.
The automotive sector’s exposure to changing US trade conditions adds to existing pressures on manufacturers operating in South Africa, particularly those with production capacity linked to export demand.
Employment and diplomatic relations remain concerns
Although the overall economic impact is expected to be limited, the potential employment consequences remain significant for affected industries.
“Jobs will be lost, the last thing South Africa needs in the midst of an employment crisis,” BUSA said. “But perspective matters: The number of jobs affected is likely to be in the range of a few thousand.”
The business group identified a further risk in the possibility of worsening relations between Pretoria and Washington.
A deterioration in diplomatic relations could create broader uncertainty for commercial, economic and investment ties beyond the immediate loss of AGOA preferences.
For South Africa, the challenge will be to limit the impact on export-dependent industries while strengthening access to alternative markets. The country’s ability to diversify trade destinations may help cushion the broader economy, but agricultural producers and automotive manufacturers remain exposed to changes in market access, tariffs and bilateral relations with the United States.
