The US trade tariffs have created significant uncertainty in global markets, and the fallout continues to impact indexes and currencies the world over. The S&P 500 is down 10% in just two days, and U.S. high-yield credit spreads, which had previously been resilient to the initial equity pullback, have now seen their largest moves since the 2020 pandemic shock. From tomorrow, 9 April, importers must pay an additional 30% tariff on the value of South African products as part of Trump’s broader strategy to reduce trade deficits. Effectively, this now means, for example, that a $1 million shipment would incur $300,000 in import tariffs.
South Africa’s Agriculture ministry has already told the sector to start preparing for a “post-Agoa world”, opting to hope for the best while preparing for the worst.
The impact extends beyond exports, as reduced trade revenues and uncertain investment could weaken the rand, putting pressure on emerging market currencies. This depreciation would increase costs for businesses involved in cross-border payments, as intermediary fees could spike due to higher payment volumes and currency hedging demands. Businesses would likely face steeper charges for wire transfers, currency conversions, and compliance checks.
However, there is a silver lining: a number of South African commodities have been exempted from the tariffs. Mining stocks have seen record performance, boosted by a surge in gold prices-up 19% since the beginning of the year. Despite this, businesses must remain vigilant, regularly assessing their international money transfer providers to ensure they’re getting the best possible deal amid shifting economic ccondition.
Harry Scherzer, Actuary and CEO Future Forex
Soweto Sunrise News
