South Africa and the USA: Trade Agreement with a billion-dollar deal for cars and LNG!

South Africa and the USA: Trade Agreement with a billion-dollar deal for cars and LNG!

In a current advance for the promotion of bilateral trade relationships, South Africa and the United States have announced a new trade agreement. On May 26, 2025, South African Presidential Minister Khumbudzo Ntshavheni announced that South Africa is planning to import liquid gas (LNG) worth $ 1 billion a year from the USA. In return, Washington will do without tariffs for 40,000 new cars from South Africa. This preliminary agreement should apply for ten years and is part of a more comprehensive proposal that has to be checked by a US trade officer, as Krone.

The agreement stipulates that the USA will also invest in the development of gas production in South Africa, including procedures such as fracking. Customs to 385,000 tons of steel and 132,000 tons of aluminum per year should also be omitted, which could further boost economic relationships between the two countries.

political framework conditions

The geopolitical mood is also influenced by Trump's policy, which includes a review of the African Growth and Opportunity Act (AGOA). This agreement that has been in force since 2000 enables African countries to avoid tariffs to certain exports to the United States. South Africa is the largest beneficiary of this agreement and is now faced with possible challenges, especially since membership is checked annually. Trump's announced attitude could endanger the future cooperation, such as [DW] (https://www.dw.com/de/trumps-politik-gefochs.

economic effects

The effects of the AGOA on the South African economy are considerable. According to estimates, motor vehicles that can be exported to the USA without tariffs make 22% of South Africa exports to the United States, which corresponds to a value of $ 1.88 billion. This shows the important role of the automotive industry for the South African economy. The possibility of exclusion from Agoa is therefore a central topic for business leaders in South Africa. Chris Hattingh from the Center for Risk Analysis thinking factory warns that the country should prepare for a possible exclusion in order to secure the livelihood of over 200,000 employees in the industry.

The latest developments in trade relationships also offer opportunities for diversification of trade, with potential for other areas such as mining and agriculture. Ramaphosa has already signaled that the South African government is ready to intensify the cooperation in various sectors.

Overall, there is both hope and concern about the future development of trade relationships between the USA and South Africa, while both countries are trying to find a common economic basis.