US Tariffs Threaten African Trade Pact

The US decision under former President Donald Trump to slap tariffs on African nations — including Lesotho, Madagascar, and Mauritius — is more than just a trade policy headline. For USDZAR traders, this marks a potential turning point in South Africa’s trade exposure, investor sentiment, and currency volatility.

Tariffs Override AGOA: The End of a Key Trade Lifeline

Trump’s new tariffs override the African Growth and Opportunity Act (AGOA) — a trade pact that had allowed over 30 African nations to export thousands of products to the US without tariffs for 25 years. Lesotho alone faces duties as high as 50%, risking 12,000 textile jobs, according to its trade ministry.

South Africa’s Trade Minister Parks Tau called the move “devastating”, as AGOA had been one of the few US policies aimed at supporting Africa’s shift away from mining-dependent economies. With AGOA likely to expire this September — and no White House comment on an extension — markets are bracing for ripple effects.

Why USDZAR Is in Focus

While South Africa wasn't hit with the harshest tariffs directly, it's still exposed:

• South Africa sends 7.45% of its exports to the US, but only makes up 0.4% of US imports.
• Many of those exports are inputs used by US firms — meaning a squeeze on African partners could backfire on US supply chains too.
• The AGOA collapse increases uncertainty for foreign investors, many of whom already view South Africa as a fragile economy balancing political risk, high unemployment, and shaky energy supplies.

This kind of geopolitical situation tends to push traders toward the dollar — not the rand.

What Happens When AGOA Access is Lost

Ethiopia offers a preview of what happens when AGOA access is lost. In 2021, the US removed Ethiopia from the pact during its civil war. 18 companies left, including Calvin Klein-owner PVH Corp., resulting in over 11,000 jobs lost.

This kind of economic pullout is hard to ignore — and for countries like Lesotho and Madagascar that rely on textile exports, it could trigger factory closures, mass unemployment, and weaker regional demand. South Africa, as a hub for African trade, is likely to feel the secondary shocks.

Rand Outlook

For the USDZAR pair, here’s what you should watch:

• Short-Term: Expect rand weakness as investors react to growing trade and policy uncertainty.
• Medium-Term: If AGOA is allowed to lapse without replacement, there could be further outflows from regional economies, denting investor appetite for African markets.
• Volatility risk: With SA elections also approaching and the Fed holding a firm tone, the rand could remain highly reactive to any US policy news or risk-off moves.

Key Levels to Watch

• Resistance: 19.00 – A break above this level would likely signal a new wave of USD strength vs. the rand.
• Support: 18.30 – This area has held during recent dips, but could be tested if local optimism picks up or US inflation surprises on the downside.

Bottom Line is USDZAR isn't Done Reacting

This latest tariff move is more than just an anti-China measure in disguise — it's a direct hit on fragile African supply chains and a warning that US protectionism isn't over. For South Africa, the fallout might be indirect, but the economic and market sentiment damage is real.

For traders, staying nimble on USDZAR — and watching key policy and trade headlines — is crucial. Risk remains tilted to the upside for USDZAR unless there’s a surprise policy reversal or AGOA gets renewed under pressure.