The US tariffs that shook SA’s trade – and why Mauritius may hold the key

By Samina Jaffery*

The United States has moved from a low-tariff baseline to a much tougher trade stance in 2025. South African exporters—long beneficiaries of the African Growth and Opportunity Act (AGOA)—now face some of the steepest duty increases since the 1990s.

On 2 April 2025, Washington introduced a 10 % across-the-board duty on all imports. By August, it layered on country-specific surcharges and industry-level hikes that now define the new normal for global suppliers.

The headline rates:

Together, these measures mean many South African shipments now carry tariff exposure before logistics and compliance costs.

The ripple effects across industries

• Automotive: A 25% levy threatens roughly $2 billion in annual US car parts exports, already pressuring the Rosslyn and East London assembly hubs.

• Agriculture: A 31% tariff on citrus adds about $4.50 per carton, squeezing margins and risking 30 000+ rural jobs.

• Metals: Section 232 tariffs of 50% on steel, aluminium, and derivatives have erased much of the sector’s export competitiveness.

• SMEs: Export orders to the U.S. have dropped by nearly half since April 2025, as smaller firms re-price or pause contracts.

• Macro impact: Treasury modelling suggests a 0.2-point drag on South African GDP for 2025, even after rand adjustments.

The Mauritius alternative—lawful, efficient, and regionally strategic

Re-engineering supply chains through Mauritius offers a compliant way to preserve margins and diversify markets while avoiding tariff evasion risks.

1. Freeport platform

• Duty-free / VAT-free storage and re-export zones.

• Modern logistics, bonded warehousing, and light-processing rights.

• 100 % foreign ownership and fast customs clearance.

2. Tax advantage

• 3% corporate income tax for companies exporting goods (including international buy-sell).

• No capital-gains tax and 0 % withholding tax on dividends.

• 80 % partial exemption regime for qualifying foreign-source income.

3. Treaty network and reputation

• Over 45 double-tax agreements—including one with South Africa.

• Robust OECD-aligned compliance and substance requirements, ensuring legitimacy with investors and regulators.

How South African firms can pivot—without crossing the line

CFO checklist — turning strategy into action

1. Quantify exposure: Recalculate landed costs under the 10 %, 25%, 30%, and 50% tariffs by HTS code.

2. Segment markets: Separate US-bound sales from alternative-market volumes.

3. Design structure: Establish a Mauritius trading or Freeport entity; confirm eligibility for the 3 % rate.

4. Build substance: Appoint local directors, maintain an office, and keep operational staff on island.

5. Review tax & customs: Align transfer-pricing, treaty positions, and export documentation with current OECD and SADC standards.

6. Monitor policy: Track AGOA renewal and US Section 232 updates monthly.

The takeaway

South Africa’s trade calculus has changed dramatically. The tariff wave of 2025 has turned US market access from a privilege into a premium.

By contrast, Mauritius—with its Freeport efficiencies, 3% export tax rate, and stable

regulatory climate—offers regional traders a way to re-balance portfolios, defend

profitability, and stay globally compliant.

*Samina Jaffery is the Managing Director of Brent Consulta, based in Mauritius. samina@brent.mu