In January 2023, South Africa implemented a contentious law known as the Expropriation Act aimed at addressing the racial inequalities stemming from apartheid. This legislation allows the government to expropriate land, potentially without compensation, if the seizure is deemed “just and equitable and in the public interest.” Such a move has sparked outrage in the United States, particularly from President Donald Trump and his South African-born adviser Elon Musk, who assert that the law discriminates against White South Africans. The friction has led to Trump issuing an executive order on February 7, revoking nearly $440 million in US aid to South Africa under accusations of human rights violations and concerns over the country’s stance on international issues, including its position on Israel amidst the ongoing conflict in Gaza.
The repercussions of this law may extend beyond aid cuts. South Africa is a primary beneficiary of the African Growth and Opportunities Act (AGOA), which grants preferential access to the American market. However, with US lawmakers considering the revocation of these benefits during the AGOA review, the potential loss could entail significant economic setbacks for South Africa, particularly its agricultural sector which depends heavily on exports including citrus, wine, and fruit juice.
Economic experts warn that South Africa may face an average of 3% tariffs on agricultural exports if removed from AGOA, leading to reduced foreign exchange earnings and possible job losses. The agricultural industry, crucial for both local and US markets, risks a major contraction, threatening approximately 55,000 jobs linked directly to citrus exports.
Additionally, South African President Cyril Ramaphosa expressed a desire to rebuild relations with the US, indicating a willingness to negotiate a comprehensive deal encompassing trade, diplomatic, and political concerns. He emphasized the need for thoughtful engagement rather than reactive measures to the ongoing tension. This situation underscores the delicate balance South Africa must navigate as it seeks to redress historical injustices while maintaining vital economic ties with the United States.