US withdrawal of AGOA benefits puts South African exporters under pressure.
Author: Likho Mbuka, The SA Trade Desk
South African exporters face uncertainty after the United States announced its intention to withdraw the country’s benefits under the African Growth and Opportunity Act (AGOA) from January 1, 2027.
While the decision is expected to have a limited impact on the economy as a whole, businesses that have benefited from preferential access to the US market could face higher import duties, putting pressure on their margins and competitiveness.
NWU Business School economist Prof Raymond Parsons says agriculture and the motor industry will bear the brunt of the decision. However, he considers the broader economic impact manageable if businesses adapt and identify alternative markets.
“Although the widely anticipated removal of South Africa’s AGOA preferences by the US on January 1, 2027, will have a minimal impact on the domestic economy as a whole, specific sectors like agriculture and the motor industry will inevitably be negatively affected,” Parsons says.
The Department of Trade, Industry and Competition (the dtic) puts the value of South African exports under AGOA at approximately US$1.7bn in 2025, down from US$4bn in 2024.
These exports accounted for about 10% of South Africa’s exports to the US last year and approximately 1% of the country’s total global exports.
Around 89% of South African exports to the US entered under ordinary World Trade Organisation most-favoured-nation terms.
The withdrawal therefore does not mean South African businesses will lose access to the US market.
However, exporters whose products benefited from AGOA preferences could face higher import duties, potentially putting pressure on their margins and competitiveness.
Parsons believes the response will require closer collaboration between government and businesses to identify alternative trade strategies.
“Addressing the negative economic consequences of losing AGOA preferences will therefore continue to require close collaboration between government and the relevant business interests to identify alternative trade strategies,” he says.
The dtic is also looking to support affected businesses on a company-by-company basis while engaging social partners on measures to strengthen productive sectors, diversify exports and protect jobs.
The department maintains that South Africa has made efforts to address US concerns through additional concessions tabled during negotiations that began in 2025.
However, it expressed concern that Washington had raised new issues that had not formed part of those discussions. The broader trade relationship remains significant. Bilateral trade between South Africa and the US reached US$28.8bn in 2025, while more than 600 American companies operate in South Africa, supporting approximately 134,600 jobs.
Parsons says that South Africa needs to accelerate the diversification of its export markets, including opportunities in East Asia and through the African Continental Free Trade Area. He also highlights the need to reduce the cost of doing business locally, particularly through faster logistics reforms in rail and ports, to maintain the country’s international competitiveness.
For exporters, the immediate challenge will be to manage the potential loss of preferential access while maintaining their position in the US market and developing alternative export opportunities.
