US AGOA withdrawal puts SA trade policy under scrutiny

Washington’s move to strip South Africa of preferential export access has placed the country’s trade and economic policy framework under renewed scrutiny, with the decision landing on a domestic landscape where manufacturing remains in contraction and the property market is losing momentum. The week’s institutional choices, from the US trade announcement to Finance Minister Enoch Godongwana’s temporary fuel levy relief, now sit at the centre of the country’s economic outlook.

The most consequential development came from the United States, which announced its intention to withdraw South Africa’s benefits under the African Growth and Opportunity Act (AGOA) from January 1, 2027. The decision puts at risk qualifying South African exports that currently enjoy preferential access to the US market, with the agricultural and automotive industries identified as facing potential consequences.

Accountability questions now sit with both governments. The South African government has said it will engage with affected industries and continue efforts to diversify export markets. Within the private sector, the Citrus Growers’ Association of Southern Africa warned that the move could put jobs at risk, particularly in the Western and Northern Cape, where some growers have developed orchards specifically for the US market. The association’s chief executive, Dr Boitshoko Ntshabele, said the trade relationship had benefited both South African producers and American consumers.

Professor Raymond Parsons, an economist at North-West University Business School, said the automotive and agricultural industries were likely to bear the brunt of the proposed exclusion, although the overall impact on the economy could be limited. A fuller assessment of the week’s data and market movements is available at https://thenational.co.za/news/2026-11-08-sunday-review-manufacturing-struggles-agoa-uncertainty-and-fuel-relief-shape-outlook/

On the domestic policy front, the fuel price adjustment that took effect on Wednesday delivered uneven relief, and its composition reflects choices made by the fiscal authorities. Petrol prices decreased by just one cent a litre, while diesel prices fell by more than R1 a litre. The wholesale price of 0.05% sulphur diesel declined by R1.10 a litre, and 0.005% sulphur diesel fell by R1.20.

The reductions incorporated temporary fuel levy relief announced by Godongwana in the Medium Term Budget Policy Statement, under which the general fuel levy was reduced by R1.50 a litre for petrol and R3 a litre for diesel. The relief is scheduled to run until December 1, leaving open the question of what replaces it when it lapses. Higher international petroleum product prices, a weaker rand during the fuel pricing review period and an increased slate levy limited the benefit for petrol users.

Meanwhile, manufacturing data offered policymakers a mixed picture. The Absa Purchasing Managers’ Index (PMI) increased by 0.9 points to 49.6 in October from a revised 48.7 in September, but the index remained below the neutral 50-point mark, indicating that manufacturing activity was still contracting. All five components of the headline index improved, though employment remained weak, and the purchasing prices index rose sharply from 71.1 to 73.7 points, reflecting mounting input cost pressures.

Parsons said the manufacturing sector was showing welcome resilience, but the outlook for employment and inflation remained concerning. His colleague Professor Waldo Krugell said businesses were becoming more upbeat despite difficult conditions, although rising cost pressures could dampen prospects in the months ahead.

The residential property market added to the evidence of softening demand. Annual house price growth eased to 5.1% in the third quarter of 2026, from 5.9% in the second quarter and 6% in the first quarter. FNB’s latest Property Barometer showed monthly annual growth slowing from 5.4% in July to 4.7% in September. FNB senior economist Siphamandla Mkhwanazi said higher borrowing costs and weaker real income growth were restraining demand.

“Prices are still rising nationally, but the premium over consumer inflation has narrowed and the wealth effect support to household spending is fading,” he said. According to the Pam Golding Property Group’s residential property index, the Western Cape remained the strongest regional market, recording average house price growth of 11.5% in the third quarter, compared with 2.9% in Gauteng and 2.2% in KwaZulu Natal. The slower growth reflects a market increasingly shaped by affordability, local economic conditions and regional differences in demand.

Markets tracked institutional developments abroad. The rand traded at R16.53 against the dollar on Friday morning, weakening by 0.25%, after strengthening earlier in the week on the outcome of the US midterm elections. It was little changed against the pound at R22.19 and gained 0.07% against the euro to trade at R18.50. The Democratic Party’s gains in both chambers of Congress raised expectations of greater political checks and balances on President Donald Trump’s administration, weakening the dollar and supporting emerging market currencies earlier in the week.

Gold was down 1.03% at $4,044.93 an ounce on Friday, while Brent crude traded at $99.82 a barrel, up 1.56% for the session. The oil price had fallen sharply earlier in the week after the US midterm elections raised expectations of a possible easing in tensions involving Iran, but renewed concerns about attacks on shipping in the Gulf contributed to a rebound on Friday. Despite the recovery, Brent was still heading for a weekly loss of about 12%.

For South Africa’s decision-makers, the coming weeks combine domestic economic challenges and external uncertainties, from weak manufacturing conditions and affordability pressures to the trade consequences of losing AGOA benefits, and whether Pretoria’s engagement with affected industries can offset the damage remains the open question.