When President Trump’s 30% tariffs on South African goods took effect on 1 August, many analysts braced for a market meltdown. Instead, the JSE All-Share Index hardly moved on the day and went on to climb from around 98 500 to 101 859 at the time of writing – a solid 3.5% gain during the month and up more than 21.1% for the year to date.
South Africa found itself hit with one of the highest tariff rates globally, sitting uncomfortably in the middle of the emerging market pack. While Brazil bore the brunt with rates around 50%, and East Asian markets like Thailand negotiated their way down to roughly 19%, South Africa’s 30% rate was meaningfully higher than most regional peers.
Markets shrug off tariff turbulence
The rand’s reaction tells the story best. Rather than collapsing as many feared, it actually strengthened to near nine-month highs of around R17.50 to the dollar, buoyed by rising gold prices and dovish US Federal Reserve signals. Meanwhile, the JSE Top-40 Index actually closed up 0.6% on the day tariffs kicked in, supported by gold miners benefiting from stronger bullion prices.
Economic fundamentals provide unexpected support
Recent encouraging economic data have upheld a resilient domestic economic backdrop. SA retail sales grew 1.6% year-on-year in June, manufacturing output rose 1.9%, and mining production expanded 2.4%. While these aren’t particularly buoyant numbers, they do represent steady improvement.
The South African Reserve Bank has maintained its easing bias, having already factored in a limited tariff impact on GDP of a mere 0.1 percentage points. Growth is now expected to be 1.1% in 2025.
The real test lies ahead
The true economic impact of tariffs may become evident six to 12 months after implementation, particularly for the most exposed sectors, including the automotive and agriculture industries. Mercedes-Benz South Africa and other vehicle exporters face significant competitive pressures, while agricultural exporters are scrambling to diversify into markets like China.
The Eastern Cape, heavily dependent on vehicle exports, shed 36,000 manufacturing jobs in the second quarter, giving a troubling preview of potential broader impacts down the line.
What investors can expect
For now, South African equities still appear to offer compelling value. Trading at a price-earnings ratio of 17.4 times, 36 % below the S&P 500’s 27 times, the JSE continues to attract interest from domestic institutional investors who recognise this compelling value relative to other markets.
The bottom line
While South Africa faces higher tariffs than most emerging market peers, the immediate market impact has been surprisingly muted thanks to early pricing adjustments and supportive domestic factors. The real test will come in 2026 as trade disruptions work through the economy, making continued economic reform and trade diversification critical.
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