The expiration of the African Growth and Opportunity Act (AGOA) last month ended 25 years of duty-free access for more than 30 African countries to the U.S. market. South African exporters now face tariffs of up to 30%, putting pressure on industries dependent on agricultural and manufacturing exports.
Trade, industry, and competition minister Parks Tau said the government is working to secure either an extension or a new agreement to reduce the impact on trade. "The priority is to get Agoa renewed even if it is for a short period to support South Africa's export to the U.S.," he said.
According to the U.S. International Trade Commission, total bilateral trade between South Africa and the U.S. reached US$20.4 billion in 2024. South Africa's exports totalled US$14.6 billion, while imports from the U.S. amounted to US$5.8 billion. Under AGOA and the Generalized System of Preferences, about 28% of South Africa's exports, worth US$4 billion, entered the U.S. duty-free, with the remaining 72% traded under the most-favoured-nation regime.
With the expiry, exporters are now facing higher costs and reduced competitiveness in the U.S. market. Lesego Serolong Holzapfel, founder and CEO of Bokamoso Impact Investments and the black female-owned wine brand Moedi Wines, said the 30% tariff has forced the company to adapt its strategy.
"The termination of Agoa benefits and the subsequent imposition of a 30% tariff on South African agricultural exports have had a substantial impact on Moedi Wines' operations. The United States has been one of our fastest-growing export markets, and the sudden escalation in trade costs has significantly undermined our competitiveness," she said.
"Our landed costs have increased to a point where price positioning relative to wines from countries that continue to enjoy preferential access has become a major challenge. This has translated into slower growth in export volumes, with previously projected expansion of up to 40% in the U.S. market now halved."
To offset losses, Moedi Wines is focusing on expanding exports to other regions. "Our immediate response has been to accelerate diversification. Europe and Scandinavia, including the United Kingdom, Denmark, and Germany, have become key growth targets, and we are expanding our footprint into high-potential African markets such as Nigeria, Ghana, and Angola," Holzapfel said.
The company has also invested in e-commerce to reach consumers directly in more than 40 U.S. states, aiming to reduce the impact of new tariffs. However, Holzapfel noted that maintaining competitiveness in the U.S. remains challenging, with price sensitivity affecting sales and cash flow.
Source: Food for Mzansi
