Tariff U-turn: Where does SA fit in now that Trump's announced a pause for most countries?

The Money Show's Stephen Grootes is joined by Feroz Basa, Head of Global Emerging Markets at Sanlam Investments.

The latest tariff pronouncements by Donald Trump have resulted in dramatic shifts in world stock markets over the last 24 hours.

After announcing the last percentage levels per country just over a week ago, the US President backtracked with a 90-day pause on implementing the higher tariffs, which means a 10% base rate would apply around the world.

China, of course, was punished further with its tariff increased to 125% because Beijing retaliated. There are now reports coming in that it will actually be 145%, with the 125% being added on top of an existing 20% fee.

Stephen Grootes gets some insight from Feroz Basa, Head of Global Emerging Markets at Sanlam Investments.

One has to look carefully at what exactly was said by the Trump administration, Basa says.

Within the announcement of the tariff pause (bar China), there was a clause to say there would be repercussions for 'serious offenders' which includes South Africa he points out.

"When Trump was talking about serious offenders it meant among others the European Union - their biggest trading partner and Vietnam, which is a loophole that China uses... and South Africa is thrown in that basket as well."

Feroz Basa, Head: Global Emerging Markets - Sanlam Investments

"So, we've been spared FOR NOW, but consider that our relationship with the US has seriously deteriorated."

Feroz Basa, Head: Global Emerging Markets - Sanlam Investments

Considering the comparatively small amount of our total exports to the US, listing us as a 'serious offender' is really taking a swipe at South Africa, Basa says.

"Yes we do have AGOA preferential rates and the like at the moment, but we export a billion dollars to the US. Compare that with China at $438 billion, the European Union combined is $600 billion..."

Feroz Basa, Head: Global Emerging Markets - Sanlam Investments

Trading partners around the world are saying 'actually, we need to diversity' now that the US has shown what it can do with its power under a president willing to utilise that power, Basa goes on.

"Trump has said that the BRICS countries must forget about coming off the dollar because there will be even higher tariffs if they try that; however slowly but surely I think countries will start trying to diversify some of their exports to other markets."

Feroz Basa, Head: Global Emerging Markets - Sanlam Investments

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