The decision by the United States (US) Supreme Court that President Donald Trump’s reciprocal tariffs are illegal is a welcome respite for many countries, including South Africa, who have had to grapple with an aggressive US tariff policy in recent times.
Prof. Raymond Parsons, economist from the North-West University (NWU) Business School, says the decision on 20 February declared the reciprocal tariffs illegal. The US Supreme Court upheld the principle that the rule of law applies to any changes in US import tariffs, and that legal remedies are possible for businesses wanting to redress the situation.
“The Supreme Court did not, however, address the question of whether the illegal import duties paid so far would require to be repaid now, and this will have to be litigated separately,” says Prof. Parsons.
He explains that although the US Supreme Court has now in effect also made the 30% import tariff recently imposed on South Africa by President Trump illegal, it is essential to remain realistic.
“The Court decision does not in reality simply mean going back to square one in the erratic configuration of US tariff policy. Under alternative legislation, President Trump has now imposed a new broad tariff of 15% – within a day after a previously announced tariff of 10% – for a period of 150 days, pending Congressional approval. In addition, certain key sector-specific tariffs, such as on steel and automotives, are in any event excluded from the Supreme Court’s decision.”
According to Prof. Parsons, the immediate economic impact of the Court’s verdict is therefore inevitably a recipe for more confusion and uncertainty – for South African businesses too – about future US trade policy. He says the net effect of the latest changes in US tariff levels needs to be clarified urgently by countries like South Africa who do important business with the US.
“President Trump is still determined to rebuild US tariff walls, and the threat of new tariffs remains real. The future of AGOA and South Africa’s continued participation in it are also on a completely separate policy track. Tough negotiations with the US still lie ahead for South Africa,” Prof. Parsons concludes.
