In January 2023, South Africa enacted the Expropriation Act, a law designed to address the deep-seated inequities in land ownership stemming from the country’s apartheid history. The law permits the government to seize land from private owners without compensation under certain conditions deemed “just and equitable and in the public interest.” This legislation has sparked outrage from the United States, culminating in significant diplomatic and economic repercussions, particularly concerning aid and trade relations.
The United States, particularly under the Trump administration, has reacted strongly against the land reform policy, with President Trump and his South African-born advisor, Elon Musk, condemning it as discriminatory against White South Africans. In a move reflective of this discontent, Trump issued an executive order on February 7, halting nearly $440 million in aid to South Africa, which had been earmarked mainly for health initiatives. Despite the executive order lacking specifics on the funding cuts, it was seen as a direct result of South Africa’s land expropriation policy and its perceived stance on U.S. foreign policy interests, particularly regarding Israel.
This reduction in financial aid is particularly concerning as South Africa is a key beneficiary of the African Growth and Opportunity Act (AGOA), which allows for duty-free access to U.S. markets for eligible Sub-Saharan African nations. South Africa has historically made the most of AGOA, relying heavily on it for agricultural exports, with a substantial portion of its earnings tied to this agreement. In 2021, for example, agriculture accounted for about 10% of South Africa’s total export earnings, with two-thirds of its agricultural exports benefiting from AGOA tariffs.
Economists warn that South Africa risks losing these vital trade benefits, which would not only impact the economic stability of farmers but could lead to widespread job losses throughout the agricultural sector, particularly for the largely White farmer demographic who dominate this industry. A removal from AGOA would impose tariffs approximately 3% on such exports, jeopardizing their competitiveness in the U.S. market and subsequently threatening 55,000 jobs tied to the citrus export sector alone.
Additionally, as South Africa navigates this fraught landscape, President Cyril Ramaphosa has signalled an openness to renegotiating the country’s relationship with the U.S. He expressed a desire to engage in dialogue to mend relations, indicating a preference for constructive negotiations rather than confrontational stances.
The clash over land reform has equally invited scrutiny from several U.S. lawmakers, who are considering suspending South Africa’s AGOA privileges during this year’s review if its compliance with U.S. policy interests does not improve. The potential withdrawal of these critical trade benefits poses a significant threat to South Africa’s economic health and its agricultural sector’s viability.