Joel Pollak on Trump’s 30% tariff shock for SA – BEE + motor sector’s 30% protection targeted

US Conservative Joel Pollak, the erstwhile frontrunner to become Trump's man in Pretoria, shares insights on US 'reciprocal' Tariffs announced yesterday – among them a 30% duty on South African exports into the world's biggest market. Pollak explains the White House added both direct duties and indirect charges on US exports to determine the scale of its new tariffs. In SA's case, the US calculated the effective tariff is 60%, half of which comes from BEE requirements whose legally applied add-on premiums funnel R150bn a year to politically connected elites. Pollak, who is in California, spoke to BizNews editor Alec Hogg this morning..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here..If you prefer WhatsApp for updates, sign up to the BizNews channel here..Watch here.Listen here. Edited transcript of the interview ___STEADY_PAYWALL___.Alec Hogg (00:08.3)As we reported yesterday, Trump Tariff Day arrived. We were asleep when Donald Trump, the President of the United States, delivered a couple of nasty shocks to South Africa. We'll be picking up and understanding the context from Joel Pollak, senior editor at Breitbart News .Alec Hogg (00:30.2)Joel, thanks for joining us. You know South Africa terribly well. We were all thinking that you'd be the ambassador here. It didn't happen, but it is what it is. And now we have South Africa, as far as we're concerned, back in the crosshairs of the Trump administration. What exactly happened yesterday?.Joel Pollak (00:50.563)Well, President Trump has said for a long time that he wants to restore what he sees as economic parity and trade relations between the United States and the rest of the world. And that means reciprocity, in that if countries impose tariffs and non-tariff barriers to trade on the United States, then Trump wants to impose equal, or as he said, being generous, at least half of what those costs are and those barriers are in return..The idea is to encourage the other countries to lower their barriers to trade. But Trump clearly feels that the world has been conducting trade relations at the expense of the United States, and he aims to restore parity and also create a more hospitable environment for American manufacturing and for the domestic labor force in the United States..Alec Hogg (01:48.942)In South Africa, to single us out, we have been applying 60% tariffs on US goods according to the list that came out yesterday. And as a consequence, South Africa is now going to have to pay 30% tariffs on its goods that go into the United States. That's a heck of a chunk..Joel Pollak (02:11.011)Right, those calculations were made based on not just the official customs duties that are imposed by South Africa on American goods, but also other policies that are perceived as non-tariff barriers to trade. BEE is a non-tariff barrier to trade because it does prevent some American companies from doing business in South Africa. There are other non-tariff barriers to trade. And these applied fairly well across the board. There were countries that had lowered their official customs duties, for example, in the last few days..I mean, Israel lowered its explicit tariff, its formal tariff, to zero. Not that it was actually applying a tariff to many American goods, but the few goods that were still subject to customs duties had those duties reduced to zero. But Israel is still being hit with a 10% tariff because there are non-tariff barriers to trade. So without discriminating, if a country had any kind of tariff or non-tariff barrier to trade, the Trump administration has now imposed a reciprocal, or in most cases, half of a reciprocal tariff in response..Alec Hogg (03:17.207)This is very serious for South Africa. I was looking at the numbers from the motor manufacturers and the exports last year from South Africa into the United States of motor vehicles were worth 23 billion rand. If those are now going to be slapped with a 30% tariff, it's pretty much certain that they're going to be uncompetitive..Joel Pollak (03:40.911)Well, Trump's idea is to bring that manufacturing to the United States. One way that companies can avoid having tariffs applied to their goods is simply to make those goods in the United States. Trump wants to rebuild the American manufacturing base. For the last 30 or 40 years, the American economy has moved towards specialising in services and specialising in kinds of white-collar jobs, office jobs, very theoretical jobs that don't involve manufacturing. And as a result, much of our industrial capacity has been outsourced to other countries, especially defence production. There are important elements of defence production that rely on supply chains in other countries. And that poses a strategic problem for the United States..So, Trump wants to restore the domestic manufacturing base, the ability to turn out goods if needed on demand. And part of doing that is moving the manufacturing base back to the United States. There was some movement in that direction already because companies have begun to find that the transaction costs of manufacturing, let's say in Southeast Asia, and then moving products or components back and forth to the United States was simply too difficult logistically. So there had already been some on-shoring of American manufacturing..But Trump wants it to be much larger in scale and he wants to restore the American manufacturing base, the American industrial base, to pull in workers off the sidelines, to especially increase the employment of young people, young men in particular, greater numbers of whom are sitting at home, sometimes living with parents for decades. He wants to end that, and he wants America to be more self-sufficient, both as a nation and, I suppose, individually as well for individuals to go out and earn a living..Alec Hogg (05:25.877)An interesting quandary, I suppose, for South Africa is that this country has got Volkswagen, Toyota, and BMW, who presumably are exporting into the United States. They also have factories in the United States already. But we also have Ford Motor Company here, which is a big operator. So if I hear you correctly, the strategy from the administration appears to be: well, don't make those vehicles in South Africa, come and make them in America, and sell them into the domestic base by giving local people work. Is that accurate?.Joel Pollak (06:02.777)That's part of it, although I don't know if it means that the manufacturing in South Africa will necessarily dry up. Remember that many of the vehicles made in South Africa are for driving on the left, not on the right. So we're not really going to be manufacturing those in the United States unless we decide to export those right-hand drive vehicles to the right-hand driving world, such as it is. But I think that Trump is basically saying, yes, we want to improve the American manufacturing base, and we actually are not responsible for what happens to other countries. Other countries favour their own industries. Why shouldn't we favour ours?.There is this idea that dates back to the Clinton era, which is that the United States is so wealthy that it can afford to lose some of its production capacity, its manufacturing base, to other countries. And that our role is to help the other countries reach a higher stage or level of development, higher per capita GDP. And so we have to give up a little bit of what we have so that others may benefit. And Trump really doesn't believe that. Trump says the cost that that imposes on domestic constituents, on the American workforce, on labour unions, is simply too high. And he wants to make sure that Americans are strong economically and that American industry returns onshore. And he's perfectly willing to trade with other countries. He's perfectly willing to see other countries prosper, but he feels that the United States has been taken advantage of..Now, many people from my political and philosophical background in the conservative movement tend to have a more libertarian approach, an approach that emphasises the old values of Ricardo and the benefits from free trade and comparative advantage and so forth. And Trump would actually say that he is an enthusiast for free trade. He just wants it to be fair. And while I think that sometimes talk about fair trade is a cover for protectionism, I think he also has a point. When you look at it in terms of reciprocity, it is confusing to explain why countries do get away with charging such extremely high tariffs on American goods and why we've put up with it for so long when we do have a manufacturing capacity that has dwindled, and we have communities that have been emptied out where unemployment is very high, where jobs have disappeared. Why have we imposed this cost on our own manufacturing base?.And part of the answer is politics, that the white-collar workers are overrepresented in government. They tend to control more of the, to use a Leninist term, the levers of power in the media, in politics, and the American worker is just not as well represented, even with labor unions and so forth, because the labour unions can themselves become their own aristocracy. I mean, at the moment, Trump is also exploiting that because the leadership of the labour unions generally have been so in the pocket of the Democratic Party, while their own membership is actually shifting to the right, and many union members actually voted for Donald Trump..Now, there was more of a formal link between some unions and the Trump campaign and the Republican Party this year. It's been the most pro-union Republican campaign, the 2024 campaign in recent memory. And the Secretary of Labor in the Trump administration is seen as a very pro-union Republican. So there has been a shift toward unions in general, and there are some union leaders with good relations with the Trump administration, but generally the rank and file have moved toward Trump even when the leadership has not. And so I think what Trump is basically saying is he's looking out for the interests of American workers, whether unionised or non-unionised, public sector union, private sector union. He's looking out for the interests of American workers who have not been represented very well, at least when it comes to these questions of industrial production and the private sector..Alec Hogg (10:08.236)Interesting point you make there, and the hypocrisy in South Africa is stark. We pay 30% more for new cars than anyone else in the world. Maybe not anyone else in the world, but in most parts of the world, because we have tariffs on vehicles, too. As you said, that's reciprocal. What's the next step for South Africa? The government, I suspect, is looking to extend relationships into China. Is that their next hope? The difficulty there, of course, is that the Chinese are starting to impose tariffs themselves..Joel Pollak (10:41.987)Well, China would be a difficult partner for South Africa because China is not necessarily as open to imports as the United States is. The United States is the world's largest market for goods, and Trump has tried to make it more of a level playing field for American workers. China, on the other hand, has been very aggressive at maintaining its own closed markets, and while they may be open to deals, those deals are going to require that South Africa make significant concessions on issues of local manufacturing, intellectual property rights, and so on. So, you may end up getting some of the things that South Africa wants to sell to China, but in the long term, China has an interest in keeping its own people employed, keeping its own factories producing and being able to export its goods to the rest of the world at competitive prices..This is the problem: the Chinese model works very differently. It works by keeping manufacturing and trade very tightly under the control of the government, and South Africa is trying to balance its economy more towards the free market. That tension is going to make it difficult to build a solid, long-term trading relationship with China..Joel Pollak (12:58.281)in Haaretz, which is a left-wing Israeli newspaper. And at the time, Israel was flirting with a government of national unity. I think Ariel Sharon was the prime minister and somebody else. I can't remember who was leading the opposition, but basically there was talk about a government of national unity. And because Tony reads voraciously, I mean, he reads about politics in every single country. You know, if I had a copy of The Economist on my desk in the parliamentary office, it would come back to my office a few hours later. It would disappear and then return,sort of crumpled and very well-read by Tony. So one article that he pointed out to me that I actually printed out and put up on my wall was an article about the government of national unity phenomenon in Israel over the decades, and the author, who I think was the publisher of Haaretz, pointed out that Israelis had never been more disunited than when they had a government of national unity. That you don't actually need a government of national unity to have national unity. That the things that unite a country areare much broader than a coalition of political parties. They have to be, otherwise the nation cannot succeed. So the argument was that sometimes a strong opposition is better for national unity because as long as your democratic system works with its checks and balances, you can have a…healthy and adversarial relationship between the governing party and the opposition party without destroying the essential bonds that make a society survive. And so the argument in this article was actually against a government of national unity saying that we actually need a strong opposition so that we can oppose the policies of, I think it was Ariel Sharon or whatever, mean the substance of the policies didn't matter. The point was simply about the role of opposition in a democracy. And while nobody likes to stay in opposition forever and there are certain advantages to being in government,sometimes it is better to choose a path that sticks to your principles. Have to, as Tony liked to say at the time, have to marry principle and politics. You don't just get away with having high-minded principles. You have to live in the real world. But….Joel Pollak (18:04.939)at some point it does become crucial to maintain a loyalty to the voters who put you into office by voting for certain principles and certain policies and some things cannot be compromised and it wouldn't be the first government to fail because of taxes. In the United States, the first George HW Bush term, first and only term of George Bush senior, fell apart because he broke a promise not to raise taxes. "Read my lips," he said, "no new taxes," and then two years later, he raised taxes so…understand why it's such a divisive issue..People don't want their taxes raised unless they're completely confident that the money is being spent properly. And in South Africa, as well as where I live right now in California, there's a lack of public confidence in the government to spend tax money wisely and properly. I mean, here, you know, we don't have a VAT, but we have a sales tax that's applied locally, and different cities can choose their own sales taxes. We now have some of the highest sales taxes in the nation because the voters actually passed a tax increase on themselves in a referendum..In November, I thought it was wrong. I voted against it, but the majority of voters in Los Angeles County agreed to raise the sales tax by one quarter of 1% to fund services for the homeless. Now, I have no confidence in our local government to spend the money wisely, and it turns out I was right because they discovered that $2.3 billion had been spent on the homeless without anyone knowing where it went. So we don't actually know if it helped anyone. Very third-world stuff. I'm sure it sounds somewhat familiar from….debates in South Africa because unfortunately when you have a one-party system, as we do here in Los Angeles, you have the same kinds of abuses that happen in one-party hegemonic systems in other parts of the world. But we did have the voters decide to raise taxes on themselves so there isn't really a violation of an agreement between the government and those governing..Joel Pollak (22:53.997)But if you come to office promising a better life for all and a more affordable life and then you raise taxes, people may have a problem with it. And especially in a coalition government where different parties really did run on different things, it's going to be even more of a challenge..Alec Hogg (23:10.471)Well, we haven't had a collapse yet formally, but if you were a betting man, or if you were a bookmaker, you wouldn't be giving odds. It's pretty obvious what's going to happen next. But there was one other issue that I'm a little bemused about. We've got AGOA, or the access of South African products into the United States. I think most South Africans were saying, well, whatever the Trump tariffs are, doesn't really affect us because we've.We're in AGOA for the moment anyway, and we're not going to get punished as a result of that. And yet these reciprocal tariffs have still been announced. Do you know what's going on there or what the difference is between the two?.Joel Pollak (23:53.303)I don't know, and I also don't know the implications of how the tariffs work within the US-Mexico-Canada agreement, which Trump passed in his first term. It was pointed out to the Secretary of the Treasury, Scott Bissette, that Canada and Mexico had been left off the list of countries that are being hit with tariffs. Now, there is an ongoing dispute with each of those countries, and Mexico is apparently about to announce its….Reciprocal tariffs on the United States, and of course, Canada has been fighting very loudly with the United States and Canada has some support within the United States, certainly among the Democrats, for Congressional action to stop the tariffs. So it's a bit of a complicated situation with regard to Canada and Mexico partly because we have free trade agreements and partly because there are domestic constituencies in the United States for free trade with Canada and for lower tariff barriers with Mexico, so it gets complicated once you come to our own borders. I don't know how AGOA is affected by all this or how it affects the tariffs. I do know that AGOA is in big trouble, whether South Africa is in it or not, precisely because it is seen as a trade agreement under which other countries benefit at America's expense. And that's the kind of agreement Trump really dislikes..And so I think the strategy for South Africa should be to say, can we entice the Trump administration to make a special agreement with us? And even if that costs us some kind of understanding with other African countries, we are the economic driver of Africa. This is what I imagine South Africa saying. This is what I would do. How do we approach the United States in a way that encourages the Trump administration to make a special arrangement with us, a bilateral deal that applies to South Africa and South Africa alone, where we can enjoy a much closer trade relationship with much lower tariffs or no tariffs with the United States as long as we do these few things the United States is asking of us, and I don't think the United States is asking South Africa to do anything that's not actually in South Africa's own core interest. So I think that that's the kind of conversation that needs to be happening at the Department of Foreign Affairs, not did we put across the talking points to Trump effectively enough so that he's convinced that we're right and he's wrong because that's not how he works..Alec Hogg (26:05.61)I watched for the very first time a full debate yesterday on television, and Mmusi Maimane, who voted for the VAT increase, his little party with two people, but he used to be, as you know, the leader of the opposition. At the end, when he was standing up and had his couple of minutes,.He was saying we need to get closer to America. So at least there's some people who are thinking along this way, but how good a friend could the United States be to South Africa? There's been plenty of stick. What could the carrot be?.Joel Pollak (26:38.575)The carrot is high-tech investment in the South African energy sector in particular and in South African infrastructure. I've also floated the idea that the United States could support a South African Olympic bid in 2040, 2044 to become the first African country to host the Olympics. I think the high point of South Africa's presence on the global stage in the post-apartheid era was probably the World Cup in 2010, the FIFA World Cup..And I know that because I knew Americans who had no connection to South Africa whatsoever, who made the trip to South Africa and were deeply impressed.And they thought it was a fantastic event. And I think it has actually surpassed every World Cup since, in terms of its logistical arrangements, in terms of the excitement of the matches, the general feeling of safety and orderliness. I mean, that happened because South Africans pulled together. And I remember Helen Zille, who was the newly elected mayor of Cape Town at the time, really worked hard to make sure that the public wasn't on the hook for the cost of the stadium and so forth. I know that's a bit controversial and there's still some economic hangover of some of those projects, but.Essentially, South Africa united and created a healthier environment for business, better infrastructure and better public safety. And if you look at the statistics since then and what's happened to South Africa since then, the decline of transportation networks, the rise in crime again to levels not seen since the 1990s and even higher than those levels, the flight of foreign investment, you look at what's happened since then and it's very sad..Joel Pollak (28:14.897)I do think that the Olympics could be a way for South Africans to rally around a common event, a common cause, common celebration. And everybody likes a good party, but especially South Africans. Get everyone together around a showcase of the country. Concentrate the collective mind and will on improvements that will lay the foundation for future economic growth in South Africa. And I think the Olympics makes it less abstract. It gives people an idea of where they're going. So that's why I floated that idea..That's the carrot that the United States could really help orchestrate—a revival of South Africa's own infrastructure and capacity and industrial base. There's no reason why the Northern Cape shouldn't be full of American-funded solar farms. There's no reason why South Africa shouldn't be pioneering water technology with the help of Israeli companies. I know that's a bad word to say in South Africa, but the Israelis have incredible water technology. Israel has become the first water-in..independent country in the world and the climate in South Africa is very similar to Israel, very similar to California. California has Israeli companies operating here busy creating desalination plants. An Israeli company now provides 10% of the water to San Diego County because they built desalination facilities with Israeli technology. Why would South Africa want to keep that out? So I think if you create a safer and more hospitable investment environment and you make necessary policy changes, I think there are many things that the United States and other countries can bring to the table in terms of building South Africa's own infrastructure and capacity. Rather than watching this decay and decline, no amount of importing Cuban doctors is going to reverse. I mean, there's not much that you can do. China will build things for you, but then it will claim ownership of them and get you trapped in a cycle of debt. It's not really a helpful country. Russia will extract your minerals, pay off a few people and say goodbye..The United States can bring technology, bring excitement, economic growth, but it has to do so in a particular environment. Americans want to work in a society where they understand the rule of law is paramount. They're not as comfortable as Russians are, for example, in operating in a sort of lawless environment. They're not as—and I'm generalising here, but this is basically the truth—they're not as comfortable as China is in operating in an environment where they don't feel human rights are respected. You may not want, South Africans may not.Joel Pollak (30:40.591)want to hear the concerns of Afrikaners described as a human rights issue, but they are. And Americans want to understand that South Africa will play by the same rules, domestically and in terms of foreign policy. If you have a government that's very nice to terrorists and whose ruling party hangs out with the Iranian regime and has meetings with Hamas, Americans are not going to want to have anything to do with that. Because Hamas to this day is still holding an American citizen, a living American citizen hostage..I saw Dirco's statement and the ANC's statement recently about Palestinians and so forth. Not one word about freeing the hostages. Seizing hostages is a violation of international law. Keeping the Red Cross away from the hostages is a violation of international law. Torture, sexual assault, I mean, go on. There's nothing about that in the South African foreign policy establishment. You cannot make Americans comfortable with a country that behaves that way. And I don't think the changes are really asking very much of South Africa because….What have the Palestinians done for South Africa lately? I understand the PLO and the ANC had relations in the 1980s or 1980s, excuse me, didn't go that far back, you know, what are the Palestinians doing for South Africa that warrants this kind of self-destruction? And I do say it's self-destruction because I've used this example before, but the University of Cape Town decided to boycott, effectively to boycott Israeli institutions, promptly lost a teaching hospital and two-thirds of their private donations, and still voted to maintain the boycott..Even after more than a year of that kind of financial collapse..Joel Pollak (32:16.897)So there's no real fixing that problem. If you have people who don't make the necessary changes when they see the consequences, then I don't know what can be done. But I do think there are enough South Africans of good will to turn things around. And I think the benefits could be massive. But there has to be a change in mindset. And coming to the United States and explaining for the umpteenth time why you don't see things the way Americans do, why you don't see things the way Donald Trump does. Donald Trump, by the way, is broadly representative of how Americans look at South Africa. I mean, it's sort of, the only different thing is Donald Trump was taken more of an interest, think, than other Americans do. Americans don't like what they see when they read the news about South Africa. And it's not just because the news is, as was once said in South Africa, the news is racist. What South Africa is doing is not good.. And… xenophobia against other Africans in South Africa. That makes headlines in the United States. Why? Not just because Americans are watching the news, but because we have a large number of African immigrants in the United States who understand what's being done to their relatives in South Africa. I mean, my wife a few years ago was on a bus, I think, driven by a Somali immigrant to the United States. And he asked her where she was from, and she told him she was originally from South Africa. And he said, "You're terrible to my people there." You know, there's an understanding globally in the African diaspora that South Africa is terrible to other Africans. You've got to change that. .That's something that South Africa has to do, in order to be a more hospitable environment for other people to feel comfortable going there and investing there. But again, there are people who want to and people who love South Africa very deeply. I think South Africa could be so much further ahead of where it is today if it had listened to some of these critical voices both from within and outside of the country 20 years ago. It's 20 years down the drain. It doesn't mean the country's lost. The country can still turn things around, but the clock is ticking..Alec Hogg (34:12.519)Joel Pollack, senior editor at Breitbart. Thank you for giving up some of your evening. It's getting pretty late in California. You're still not back in your own home due to the fires that were experienced there. But Joel, we do appreciate your insights. And I'm Alec Hogg from BizNews.com..Read also:.BN Briefing: Trollip, Roodt on teetering GNU; Historic DA recruit; Fort Hare Duo; Trump Tariff DaySA's fiscal crisis: Dawie Roodt on debt, VAT, and the urgent need for economic reformGNU on rocks – Action SA hits "arrogant" DA, supports ANC in Budget

Joel Pollak on Trump’s 30% tariff shock for SA – BEE + motor sector’s 30% protection targeted

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