South African businesses are preparing for possible job cuts and higher export costs following a decision by the United States to withdraw the country’s preferential trade benefits under the African Growth and Opportunity Act (AGOA).
The decision, announced by Washington on Monday, November 2, will take effect in January 2027 and will also affect Rwanda.
Exporters in South Africa’s agricultural and manufacturing sectors fear the loss of duty-free access could weaken their competitiveness in the American market, forcing some businesses to reduce operations or cut jobs.
However, economists believe the wider impact on South Africa’s economy may be manageable, particularly because a significant proportion of the country’s exports to the United States already fall outside the AGOA programme.
US Removes South Africa and Rwanda From AGOA
The United States announced that South Africa and Rwanda would no longer qualify for benefits under AGOA, a trade initiative that allows eligible African countries to export certain products to the American market without paying import duties.
Washington cited practices it considers harmful to American interests as the reason for declaring both countries ineligible.
South Africa has been one of the programme’s biggest beneficiaries, using the arrangement for more than two decades to support exports of agricultural produce, automotive components and other goods.
The loss of preferential treatment means affected South African products could face additional tariffs when entering the United States from January 2027.
For exporters operating on narrow profit margins, the new costs could affect pricing, competitiveness and employment.
Citrus Farmers Warn of Possible Job Cuts
South Africa’s citrus industry is among the sectors expressing concern about the withdrawal of AGOA benefits.
Gerrit van der Merwe, chairman of the Citrus Growers’ Association of Southern Africa, said some farms had developed orchards specifically to serve American consumers.
He explained that redirecting produce to other international markets would not necessarily be straightforward.
Different countries impose their own plant-health standards, import requirements and consumer preferences, making it difficult for exporters to switch destinations quickly.
Van der Merwe warned that some workers could lose their jobs if businesses were unable to absorb the additional costs or find alternative buyers.
Although the number of potential layoffs remains uncertain, the industry is preparing for possible disruption.
South African Trade Unions Raise Alarm Over Unemployment
The Congress of South African Trade Unions (COSATU) also expressed concern about the employment implications of the American decision.
The labour federation warned that South Africa’s already high unemployment rate leaves the country particularly vulnerable to further job losses.
It urged authorities and businesses to protect workers, industries and communities that depend on export-related employment.
COSATU also criticised groups promoting allegations of persecution against white South Africans, accusing them of contributing to worsening diplomatic relations between Pretoria and Washington.
The union maintained that disputes surrounding those allegations have created economic consequences for businesses and workers.
Trump Administration’s Dispute With Pretoria
The trade decision comes against the backdrop of strained relations between South Africa and the administration of US President Donald Trump.
Trump has repeatedly raised allegations that white South Africans face persecution, a characterisation rejected by the South African government.
Pretoria maintains that such claims misrepresent the country’s domestic situation.
The disagreement has become one of several issues affecting relations between the two countries.
While the US administration cited practices threatening American interests in its AGOA decision, the supplied announcement does not establish that any single diplomatic dispute was the sole reason for the suspension.
Economists Say Wider Economic Impact Could Be Limited
Despite concerns among exporters, some economists believe South Africa’s overall economy may experience a relatively modest impact.
Agricultural economist Wandile Sihlobo noted that discussions about South Africa’s continued eligibility for AGOA have taken place for years.
He explained that South Africa’s classification as an upper-middle-income economy has prompted arguments that its trade relationship with the United States should eventually move towards more reciprocal arrangements.
Sihlobo stressed that losing AGOA preferences does not mean South African products will automatically be banned from the American market.
Instead, affected exports would generally remain eligible for entry, subject to applicable tariffs and other import rules.
He estimated that some products could face additional duties of approximately 3.4 per cent, although actual rates depend on the product and relevant trade measures.
According to the economist, nearly 90 per cent of South African exports to the United States already fall outside AGOA.
This suggests the direct impact of losing the programme’s preferences may be concentrated in particular industries rather than spread evenly across the economy.
Business Group Predicts Thousands of Jobs at Risk
Business Unity South Africa, an organisation representing business interests, estimated that potential employment losses could amount to several thousand jobs.
The assessment reflects concern that businesses facing higher export costs may have to reduce expenses or adjust production.
However, the estimate is not a confirmed number of layoffs, and the actual outcome will depend on how exporters respond before the new arrangements take effect.
Industries with limited opportunities to redirect products to other markets could face greater difficulties.
Automotive Industry Already Faces US Tariff Pressure
South Africa’s automotive sector has also been affected by changes in American trade policy.
According to the country’s automotive industry association, naamsa, the United States, Mexico and Canada together accounted for approximately eight per cent of South African automotive exports in 2025.
The United States represented the largest share of that North American market.
However, automotive exports to the US were already affected by additional tariffs introduced in 2025.
Those measures had reduced the practical value of AGOA preferences for parts of the industry even before the latest eligibility announcement.
Rwanda Also Loses AGOA Benefits
Rwanda was included in the American decision to suspend AGOA eligibility from January 2027.
However, its trade relationship with the United States is considerably smaller than South Africa’s.
According to Rwanda’s National Institute of Statistics, the United States ranked as the country’s tenth-largest trading partner in 2024.
The potential impact on Rwanda will depend on which exports previously benefited from AGOA and the tariffs that apply after the suspension.
Rwandan government officials had not provided a response to requests for comment at the time of the original report.
South Africa Plans Support for Affected Exporters
South Africa’s trade ministry sought to reassure businesses that the withdrawal of AGOA benefits would not amount to a complete loss of access to the American market.
The ministry said it was working with affected industries to assess the likely consequences and identify possible support measures.
It also announced plans to accelerate efforts to diversify South Africa’s export destinations.
Expanding trade with other markets could help reduce dependence on American preferential arrangements over time.
Nevertheless, exporters facing immediate tariff increases may require additional assistance to maintain production and protect employment.
The coming months will be important as businesses evaluate the financial implications of the US decision and prepare for the January 2027 deadline.
