Key Points:
- U.S. President Trump extended the AGOA trade pact until the end of the year.
- New U.S. tariffs effectively cancel out many benefits of the agreement.
- South Africa remains included despite strained diplomatic relations with Washington.
- Analysts warn that the short extension fails to offer long-term stability for exporters.
Washington has granted African nations a temporary lifeline by extending a key preferential trade program for one year. President Donald Trump signed the law on Tuesday, keeping the African Growth and Opportunity Act (AGOA) alive. Since 2000, this deal has allowed 32 eligible African countries to ship thousands of products to the U.S. without paying import taxes.
However, experts warn that this creates a false sense of security. Brendon Verster, a senior economist at Oxford Economics, argues that Trump’s recent “Liberation Day tariffs” effectively cancel out AGOA’s benefits. While the extension prevents a total collapse of trade, it fails to provide the long-term stability exporters need.
The spotlight falls heavily on South Africa. Diplomatic relations between Pretoria and Washington are currently icy. Trump previously criticized South Africa’s social policies and notably skipped G20 events the country hosted last year. Despite fears that the administration would cut South Africa from the deal, the country remains on the list for now.
Gina Schoeman at Citi noted her surprise that South Africa avoided exclusion, given the warnings from Trump’s team. Losing access would have severely hurt the local car manufacturing industry and sliced the country’s GDP growth.
While South Africa’s Trade Minister Parks Tau called the move a positive platform for future talks, the uncertainty lingers. The U.S. president reviews eligibility annually and can suspend countries at any time.
African leaders are reading the room. They are pushing to rely less on American policy and more on each other. George Elombi, President of Afreximbank, spoke in Johannesburg, urging nations to speed up the African Continental Free Trade Area. “The fate of our economies… can no longer be tied to the benevolence of others,” Elombi stated.
Meanwhile, countries like Nigeria and Kenya are already finalizing separate trade deals with the UAE and China to protect their economic futures.
