RAVI PILLAY: Tariffs are wake-up call for SA to compete smarter

It’s not the first time we have woken up to headlines of “Trump slaps tariffs on our exports”, and I fear it may not be the last. This time, though, the number is a sharp one: 30% import tariffs on SA goods entering the US. No nuance, no negotiation — just the blunt instrument of “reciprocal trade policy”, crafted on the basis of arithmetic, not economics.

But whether it’s a misunderstanding or a strategic ploy to rally domestic sentiment in the US, the consequences for SA are real. The US is not just any market. It absorbs more than R250bn worth of our exports annually. According to the Organisation for Economic Co-operation & Development (OECD), more than 267,000 SA jobs are directly linked to that trade.

So, what do we do now? Do we fold? Rage? Lobby and hope for the best? Diplomatic engagement is critical, but it’s not enough. We must view this moment as a mirror and a mandate. Even if this tariff never takes effect, SA can no longer afford to assume global trade access as a given. The age of benevolent market access is over. We are entering an era of assertive nationalism, economic coercion and transactional diplomacy — and we are not ready for this type of trade warfare.

If 30% is the new cost of entry, our only viable option is to become better, faster and leaner.

Let’s start by looking inward

Before we blame Washington, let’s first inspect our warehouses, ports and policies. Tariffs may be external, but waste, inefficiency and policy inertia are entirely domestic. Even if we cannot fully offset the 30%, there is much we can do immediately:

• Cut the cost of inefficiency in our value chains. We cannot dictate tariff policy in Washington, but we can fix Durban harbour. Logistical delays, port backlogs and inefficient customs processes eat into export margins far more than any tariff could. Why can’t we fast-track the fix and set ambitious deadlines? Accelerating digital tracking, modernising container handling, and breaking the silos between Transnet, the SA Revenue Service and exporters could shave off 3% — 5% in costs for certain sectors.
• Get serious about industrial clustering and supplier development. If you are building a car in SA for export to the US, your competitiveness depends not just on your plant but on suppliers like the gearbox producer in Gqeberha, the plastics manufacturer in Brits and the crate maker in Gauteng. Localisation needs to be more than a slogan — it must become a precision tool. Robust supplier development programmes can reduce import leakage, stabilise input costs and enhance lead times. Simply put, build ecosystems, not islands.
• Unlock energy security for export-intensive industries. Electricity tariffs, load-shedding penalties and generator costs significantly increase the price of SA-made goods long before they even leave our shores. The energy transition must shift from panel discussions to plant-level implementation. Export manufacturers require clear incentives to go off-grid, pool resources into shared generation and access green financing. Export resilience has become fundamentally an energy security issue.
• Invest in high-level trade intelligence. Trump’s “60% tariff” claim was based on a misreading of the trade deficit, not actual duties. In fact, 99.8% of US non-agricultural exports entered SA duty-free in 2023. However, our response must transcend correcting arithmetic errors. We need real-time trade data, rapid scenario modelling and proactive international intelligence, so when shocks arise we already know our alternatives. Which US states or sectors are our allies? Which World Trade Organisation (WTO) instruments can we leverage? Where are our fallback markets in Africa, Asia or the Middle East? 
• Get creative with offsets and trade substitutes. If the cost of US market access escalates, let’s explore co-production, joint ventures or value-added trade swaps. Can we deepen trade ties with India or Brazil in exchange for supporting their strategic energy or food security needs? Can we reconfigure exports like catalytic converters or processed metals to circumvent punitive tariffs? We need to evolve from commodity exporters into sophisticated trade tacticians.

Crisis — a signal, not a setback

This tariff proposal is unjustified. SA does not levy blanket 60% tariffs on US goods. Yet while we cannot control Washington’s worldview, we can control our response. This crisis must force uncomfortable but necessary questions. Are our exporters globally competitive on cost and reliability? Are our industrial zones truly world class? Is our infrastructure value chain genuinely competitive? If we fail to leverage this moment, we will remain passive price-takers in an increasingly volatile global economy.

It’s time we start taking ourselves seriously — as a trading nation, as an industrial economy, and as a global partner. We will engage Washington diplomatically. We will make the economic case. But simultaneously, let’s streamline our costs, rewire our value chains and sharpen our competitive edge.

This 30% tariff isn’t merely a barrier — it’s a challenge. Let’s rise to meet it, not with anger or fear but with innovation, determination and a courageous look inward.

• Pillay, a former SA economic diplomat to Switzerland, is a non-executive director of the Consumer Goods Council of SA and a faculty member at the Gordon Institute of Business Science. He writes in his personal capacity.