Sanisha Packirisamy, Group Economist; & Tshiamo Masike, Economist; at Momentum Investments
South Africa (SA) was among the original beneficiaries of the African Growth and Opportunity Act (AGOA), designated on 2 October 2000. The programme offered qualifying exports preferential access to the United States (US) market and facilitated trade between SA and the US for more than a quarter of a century.
On 2 November 2026, Washington announced its intention to remove SA and Rwanda from the programme from 1 January 2027. SA’s exclusion would end roughly 26 years of eligibility and close an established channel of economic cooperation.
The decision follows a period of increasingly strained.
Despite its diplomatic significance, we view the immediate economic impact as a limited, incremental trade shock.
For more, read Momentum Investments’ full note here.
Dr Lerato Ntuli, Economist at Anchor Capital
On the evening of 2 November, the US administration announced its intention to terminate South Africa (SA) and Rwanda’s eligibility for the African Growth and Opportunity Act (AGOA), effective from 1 January 2027. The decision follows an eligibility review by the Office of the United States Trade Representative (USTR), with the White House citing barriers to US trade and investment, corruption concerns, and practices it considers inconsistent with US national security and foreign policy interests as justification for the move.
SA has historically been the largest beneficiary of AGOA, accounting for approximately 54% of all AGOA-related exports to the US since the programme’s inception. Despite this, the immediate financial market reaction has been relatively muted. Investors have increasingly viewed SA’s exclusion as a possibility amid deteriorating diplomatic relations with Washington.
The direct economic impact is likely to be relatively contained, given SA’s limited overall dependence on the US export market. SA Reserve Bank (SARB) data show that the US absorbs only between 7% and 8% of SA’s total global merchandise exports, suggesting that the economy-wide impact of the decision is limited.
From a trade perspective, the withdrawal of AGOA benefits will increase the tariff burden on qualifying SA exports. However, the extent will vary by product, and it does not alter SA’s existing exposure to US reciprocal tariffs. AGOA provides duty-free access for eligible products by waiving the applicable US Most-Favoured-Nation (MFN) import duties. However, it does not necessarily exempt these products from separate reciprocal tariffs introduced by the US in April 2025. For example, products currently facing a reciprocal tariff of 12.5% will, from January 2027, also be liable for the relevant MFN duty. Assuming an average MFN tariff of approximately 3.4%, this would increase the combined effective tariff burden to around 15.9%. Actual rates will depend on individual product classifications and any other applicable tariff measures.
The impact is therefore likely to be concentrated in those sectors where MFN tariffs are materially higher than average and where exporters are particularly reliant on preferential market access. These include automotive components and vehicles, citrus and other fresh fruit, wine, jewellery and ferroalloys. For these industries, the loss of preferential access could erode competitiveness, particularly where exporters are unable to fully pass the additional costs on to US consumers without losing market share.
That said, local exporters have already demonstrated resilience under a more restrictive trade regime. Agricultural exports to the US faced reciprocal tariffs of approximately 30% during 2025, yet exports totalled roughly US$504mn, only 3% lower than the previous year. This suggests that strong product demand, established supply chains and limited substitution options can partially offset the impact of higher tariffs.
Overall, while some export sectors will face a more challenging operating environment, SA’s limited dependence on the US market and exporters’ demonstrated ability to adapt suggest that the aggregate economic impact will be modest. The longer-term significance is likely to depend less on the immediate tariff increase and more on whether the suspension marks a further deterioration in bilateral trade and investment relations between SA and the US.
Johann Els, Chief Economist at PSG Financial Services
The US decision to remove South Africa from the African Growth and Opportunity Act (AGOA) ends duty-free access for qualifying South African exports to the US. I think, however, that it is easy to overstate the direct economic impact. The bigger concern is the potential impact on business confidence, investment and diplomatic relations between the two countries.
South Africa is probably the largest beneficiary of AGOA, accounting for more than 50% of all AGOA-related exports to the US. But this needs to be put into perspective. Only around 7% of South Africa’s total goods exports went to the US in 2025, amounting to approximately $16.5bn. Of this, only about $1.6bn entered under AGOA preferences. That is around 10% of our exports to the US, but just 0.7% of total SA goods exports.
So, while the absolute numbers may look significant, the share of our overall exports directly affected is relatively small. This does not mean that all South African exports to the US will suddenly face new tariffs or disappear. Exports will continue, but some products will become less competitive.
The impact will also differ across sectors, with automotive, agriculture (including citrus, wine and grapes), and certain manufacturing and metals industries more exposed. It is worth noting that AGOA removes ordinary import duties on qualifying products, but does not necessarily exempt them from additional US tariffs.
My bottom line is that the direct impact on overall economic growth is likely to be small. Less than 1% of our total goods exports currently enter the US under AGOA. This is not insignificant for the businesses and workers affected, but the bigger concern is the signal it sends to investors and the potential impact on confidence, investment and our broader relationship with the US. We should not confuse South Africa’s large share of total AGOA trade with the much smaller share of our own exports that depends on AGOA.
ENDS
