South Africa and the United States (US) are moving closer to striking a limited trade deal that may bring relief for South African exporters and their US clients currently squared off against a 30% tariff regime.

On 8 September, The Common Sense reported that “South Africa may strike a trade deal with the United States of America within a month…negotiators on both sides had made some progress towards a deal that might see a dialling back of the tariff levels applied by the United States…whilst South Africa moves to address certain US investment and foreign policy concerns.”

US concerns at South Africa have grown and broadened over the past decade. Actors from the US Embassy in Pretoria, to Congress, and the White House have levelled charges that South Africa threatens US national security interests. Last week, The Common Sense reported on the latest such development, with Senator Kennedy introducing a bill to sanction certain South African leaders and institutions for threatening American interests.

Further long-standing US concerns include that South African empowerment legislation serves as a non-tariff barrier that prejudices US investors, and that expropriation legislation poses a risk to US firms that invest capital and intellectual property in South Africa.

Over the weekend, The Common Sense reported that Cyril Ramaphosa is to lead a delegation to the United Nations in New York this week. We can now report that the delegation will link up with a South African trade negotiation team already in America. In New York, Mr Ramaphosa may have a bilateral meeting with a senior congressional leader influential on foreign policy. Relevant here is a report over the weekend in The Common Sense that the House Foreign Affairs Committee on Friday moved to advance a bill that will end sanctions on Zimbabwe. Certain American strategists see that bill as a step to normalizing relations with America in order to draw Zimbabwe out of a deepening China orbit.

Certain US officials are likewise concerned at what they see as a South African drift into the orbit of Russia, China, and Iran. The Common Sense has reported at length on South Africa’s geostrategic importance in a multipolar world.

There is an additional US concern that tariffs are doing harm to SA's economy and to the interests of specific US and South African firms that trade with each other. Tariffs, in the current US administration’s thinking, serve as strategic instruments chiefly to secure leverage in trade and security talks. They are not nearly as highly regarded as economic instruments. Considerable corporate pressure has also been exercised to address tariff concerns, whilst key global companies have taken actions to draw investments and production to America, which has won administration favour that can in turn be 'traded' for tariff relief.

For all the above reasons The Common Sense understands that US officials are open to letting a limited deal on South African tariffs happen now as a nod to limited steps taken on the SA side to address US strategic and other concerns. These actions span from engaging on expanding equity-equivalent provisions to US investors, to reprimanding a SA army officer in Tehran, to delaying naval exercises with China, and criticising the signing of ‘Kill the Boer’. The Americans retain the ability, of course, to raise tariff levels again.

The odds of a deal are not at 100% yet, but Frans Cronje told The Common Sense yesterday morning that his firm had raised its odds in favour of a limited deal to 65/35 in favour.

Whilst a deal announcement will be celebrated in South Africa’s unity government and the local media, the scale of what is being negotiated is limited and will not move the dial substantially on investment, growth, or jobs numbers in South Africa. The limited deal may also amount to less than what South Africa secured out of the Africa Growth and Opportunity Act (AGOA) era.

A more expansive deal that would move that dial remains plausible (The Common Sense has previously speculated what such a deal should entail) but would require the South Africans to come up with such a plan and then engage earnestly with their American counterparts on key national security, empowerment, and property rights concerns.

Should such a deal be struck in the fullness of time, Frans Cronje told The Common Sense, “it has the potential to put South Africa on a fundamentally improved economic track and it is very important therefore that efforts towards such a deal continue on both sides of the Atlantic.”