SA fruit and wine exports will benefit from a US-China trade war. But it will be bad for everything else
- China's 15% tax on US wine, fruit and nut imports can increase South African agricultural exports to China.
- But analysts believe disadvantages far outweigh the benefits for South Africa.
- South Africa's R11.2 billion steel exports to the US is set to be hurt by the new tariffs.
South African wine, fruit and nut producers can expect increased demand from China in the next few months after that country implemented a 15% tariff on US imports, Western Cape investment agency Wesgro believes.
But the disadvantages of a trade war between the two superpowers far outweigh the benefits for South Africa.
China this week introduced import taxes on 128 US-made goods – predominantly agricultural products – days after the US introduced a 25% import tax on Chinese steel exports, and 10% on aluminium. Countries such as Australia successfully negotiated an exemption from US tariffs, but negotiations between the US and South Africa have been inconclusive.
The Chinese introduced a 15% tariff on a number of US agricultural goods that South Africa also produces - including citrus, apples, pears, mango, cashews, almonds, strawberries as well as a number of dried fruit products. US wine has also been slapped with a 15% tariff.
South Africa's growing wine and agriculture exports to the Chinese market can increase sharply due to the new tariffs, Wesgro's head of international trade Denan Kuni says.
"[But] the potential tariff increases between the USA and China are likely to have negative repercussions on global trade," Kuni told Business Insider South Africa.
South Africa is at risk of losing its R11.2 billion ($950 million) per year steel exports to the US due to the "protectionists measures", says Francois Conradie, head of research at NKC African Economics.
"There aren't really winners [in a trade war] except a small category of domestic producers who are protected by the new measures," he says.
"It is hard to see any upsides for South Africa, and [there are] a number of potential downsides through the impact on our exports to suddenly more protectionist markets."
The bottom line is that an increase in tariffs affects economic specialisation, which reduces cost efficiency for all countries, says Trudi Hartzenberg of the Trade Law Centre (Tralac). Economic concentration allows countries to focus on producing what they are best at - and relying on imports for other goods.
"The [new] tariffs means that input costs [for manufacturers] rise," Hartzenberg tells Business Insider South Africa.
"Keep in mind that factories using [the tariffed] products as inputs may well be part of global value chains, so the impact extends further."
She says at the end of the day consumers will be most affected by higher prices and fewer options.
"Trade wars are simply pernicious."
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