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Much has been made of the fact that United States (US) tariffs on South African exports are set to drop from 30.0% to 12.5%, but the effect will do little to lift South Africa's economic prospects.

The US Supreme Court’s decision in February to strike down President Donald Trump’s use of the International Emergency Economic Powers Act to force high trade tariffs on some of America's trade partners will cause those tariffs to expire in July, following which South Africa’s tariff exposure is set to fall from 30.0% to 12.5% (unless Washington replaces it with a new framework approved through Congress).

The South African government has long sought to delay and obfuscate tariff negotiations with the US in the hope that the US Supreme Court would strike down the tariffs, leading to a lower tariff regime for South Africa. That is now playing out exactly as the South Africans had hoped, but this “win” is largely an empty one and will do little to turn the South African economy around.

The reason is that a very small share of South Africa's exports go to the US via programmes that are affected by tariffs. Even the much-vaunted African Growth and Opportunity Act (AGOA) programme accounts for just 2.5% of all South Africa's exports.

Higher US tariffs have disrupted South African exports to America, contributing to a sharp drop in year-on-year shipments to the US. The automotive and agricultural sectors bore the brunt of the initial trade barriers, with US-bound vehicle exports, for example, plunging by over 50.0%.

That was, however, not universally true for South Africa's exports.

South Africa’s minerals sector, including vital technology and automotive inputs such as platinum and titanium, remained largely exempt due to heavy American reliance on these raw materials.

Before the 30.0% tariffs, precious metals, vehicles and transport equipment, and base metals accounted for roughly 70.0% of South Africa’s exports to the US.

For those industries that were directly affected, the reduced tariff regime may bring some relief, but in terms of lifting the outlook for the broader South African economy the effect will hardly be noticeable.

Even before the Trump tariff regime, the South African economy was struggling to maintain a growth rate much above 1.0% of GDP, even as its emerging-market peers were closer to 4.0%.

The reason is that South Africa’s empowerment and property rights policies are fundamentally hostile to investment, while little is being done to address local rail and port snarl-ups.

Empowerment and property rights were some of the exact issues that the Americans wished South Africa to address, but which Pretoria has refused to do.

The domestic investment climate in South Africa will remain broadly in line with what it was before the reduction in tariffs, and as a consequence the fixed investment rate will remain near it current lows – and that rate directly determines the rate of economic growth.

Sources in Washington tell The Common Sense that the South African government's attitude towards Washington, and its unwillingness to address US investment concerns, means that the prospects of securing a new investment pact with America, of a scale able to lift the rate of economic growth, remains pretty much out of reach.