South Africa is facing renewed economic uncertainty after the United States announced its intention to withdraw the country’s benefits under the African Growth and Opportunity Act (AGOA), prompting warnings from government and organised labour about the potential impact on jobs, exports and key industries.
The US has given South Africa 60 days’ notice of its plan to end AGOA benefits, with the withdrawal set to take effect on January 1, 2027.
In a statement, the Department of Trade, Industry and Competition (dtic) said it recognised the concern the decision would cause for workers, exporters, businesses and communities linked to AGOA-supported value chains. Government said it was already engaging affected industries to assess the likely impact and would continue providing support where needed.
The department added that measures previously introduced in response to US reciprocal tariffs would remain in place, while additional consultations with business, labour and other stakeholders would be undertaken to strengthen support mechanisms, improve resilience in productive sectors and safeguard jobs.
Government said it had made extensive efforts to address concerns raised by the United States and had tabled further concessions beyond those agreed in 2015 through the appropriate diplomatic and trade channels. According to the dtic, those proposals respected due process, protected South Africa’s biosecurity interests, complied with constitutional requirements and remained consistent with World Trade Organisation rules.
However, Pretoria expressed disappointment that the US was now raising issues that had not formed part of discussions when negotiations between the two countries began in 2025.
Despite the setback, government sought to reassure investors and exporters that AGOA does not define the entire economic relationship between South Africa and the United States.
According to government data, approximately 89% of South African exports to the US entered the market under normal World Trade Organisation most-favoured nation terms in 2025, while about 10% benefited from AGOA preferences. AGOA exports were valued at approximately $1.7 billion in 2025, significantly down from $4 billion the previous year, and represented roughly 1% of South Africa’s total global exports.
Trade between the two countries nevertheless remains substantial. Bilateral trade reached $28.8 billion in 2025, while more than 600 American companies operating in South Africa support an estimated 134,600 jobs.
The dtic stressed that the economic relationship remains mutually beneficial. South Africa supplies 12 of the 50 minerals regarded as critical by the US and provides around 70% of isotopes used in the United States for applications including cancer treatment. South African manufacturers also rely on US-produced inputs for goods exported under AGOA, including vehicles and boats.
Government warned that the loss of AGOA preferences could disrupt established value chains and negatively affect South African investments in the US market.
Trade, Industry and Competition Minister Parks Tau said the withdrawal of AGOA benefits should not be viewed as defining the broader relationship between the two countries.
“This decision does not define the broader relationship between South Africa and the United States, however a solution depends on the willingness of both parties to find solutions,” Tau said.
He added that government would continue supporting affected sectors, protecting South Africa’s national interests and pursuing trade and investment opportunities with the US.
At the same time, South Africa is accelerating efforts to diversify export markets through its Industrial Development Strategy and Butterfly Strategy. The country is targeting expanded trade opportunities across the African Continental Free Trade Area, the Southern African Development Community, India, China, the European Union, the United Kingdom, ASEAN and MERCOSUR. New export opportunities have already been secured for products including citrus, avocados, grapes and apples.
The Congress of South African Trade Unions (Cosatu) responded to the announcement with a stark warning that the country’s exit from AGOA could place thousands of jobs at risk, particularly in the agricultural and manufacturing sectors.
The federation said AGOA had played a significant role in supporting exports and regional value chains by providing preferential access to the world’s largest economy. It noted that South African exports to the US often incorporate components produced in neighbouring African countries, making AGOA important for regional trade integration.
While acknowledging the right of the US to determine its own trade policies, Cosatu said the decision could have serious consequences for workers and businesses already under pressure from weak economic growth and high unemployment.
The federation said it had already seen jobs being lost at factories and companies in areas including Cape Town, Atlantis, Malmesbury and Tulbagh. It warned that further losses could follow if South Africa failed to secure a favourable outcome during the remaining negotiation period.
With South Africa’s unemployment rate standing at 43.8%, Cosatu urged government to use the 60-day window before the decision takes effect to intensify negotiations with Washington and protect vulnerable industries.
The labour federation also called for an urgent intervention package for affected workers, companies and communities. It proposed subsidies, incentives, tax relief and assistance through the Unemployment Insurance Fund’s Temporary Employment Relief Scheme.
“We cannot afford to abandon a single worker, business, industry or community,” Cosatu said.
The federation further urged government and the private sector to accelerate efforts to diversify exports beyond the US market, including expanding trade with partners across Africa, Europe, Asia, Canada and Brazil.
In a strongly worded attack, Cosatu blamed lobby groups AfriForum and Solidarity for what it described as damage to bilateral relations between South Africa and the United States. The federation accused the organisations of promoting claims that had contributed to South Africa’s removal from AGOA and said workers and farmers would now bear the consequences.
Despite its concerns, Cosatu said it would continue working with government, industry and labour organisations in the US to protect jobs and support affected sectors.
“South Africa is a resilient nation. It has overcome some of humanity’s darkest moments. We will navigate these turbulent times too,” the federation said.
©Higher Education Media Services.