AGOA termination another step in ongoing series of anticipated punitive US measures

The United States’ notice to terminate South Africa’s status as a beneficiary of tariff-free trade access under the African Growth and Opportunity Act (AGOA) marks further predictable escalation of punitive measures by Washington.

Since 2000, AGOA has provided meaningful tariff relief into the US market for several sectors that can now expect to lose this benefit and be forced to compete with other global exports to the US at equal tariff rates. The fact that remaining competitive under such circumstances is difficult for many South African businesses underscores the deeply harmful problems of race-restrictive domestic regulation and state mismanagement and creates yet further urgency for domestic efforts to pursue fundamental reforms.

For most other sectors, however, AGOA tariff relief is either not applicable (some tariff exemptions override AGOA) or relatively negligible. Moreover, since the Trump administration’s tariff escalation in 2025 – which superseded AGOA relief – and its increased signalling of punitive escalation, many companies have, where possible, preemptively taken defensive measures through efficiencies and global market diversification.

Indeed, while AGOA has meaningfully impacted certain individual businesses, it is considerably less impactful on the broader South African economy than often assumed, amounting at most to a fraction of one percent of GDP.

Meanwhile, the harmful domestic policies the United States seeks to discourage – including race-restrictive economic regulation and state procurement, corruption, expropriation without market-related compensation, and other measures it deems as harming its strategic interests – have destroyed economic growth for well over a decade, ruined vital common infrastructure, and constrained South Africa’s economic output to around half of what it could have been.

By notifying South Africa of discontinued AGOA access, the United States has therefore taken one of the more constrained measures available to it in cases where it deems foreign governments to be acting against US interests.

However, given the South African government's deep commitments to its policy positions, its disagreements with Washington are highly unlikely to resolve soon. It would therefore be prudent for businesses to anticipate further punitive measures by the United States in the years ahead.

Such measures may – as in the case with revoking AGOA eligibility – be untargeted blanket measures, or they may seek to differentiate, targeting responsible government officials in South Africa or contravening organisations and businesses directly on the one hand, while on the other hand seeking to minimise harm for US-friendly businesses, jurisdictions, and reform-minded sections of society. While the United States’ targeted travel visa restrictions announced earlier this year are a promising sign that it is alert to options for constructive differentiation below the country-level, its AGOA decision indicates that measures with untargeted spillover effects remain part of its option set.

Earlier this year, Sakeliga pointed out that “numerous African countries, including South Africa, are unlikely to pass a serious AGOA eligibility review on merit.” Anticipating South Africa's loss of AGOA eligibility, we submitted proposals to the United States Trade Representative on how AGOA could be reformed in the then-upcoming Congressional review of AGOA, intended to take place in the second half of 2026. Sakeliga proposed reforming AGOA to allow for eligibility across Africa at subnational level, i.e. for businesses in eligible regions within countries or for businesses that otherwise meet market access standards regardless of national government policies.

In South Africa’s case, our policy proposals would mean retaining AGOA eligibility for parts of the local economy, rather than a complete loss. However, the United States Congress’ decision to delay its legislative review by two years has closed the possibility of AGOA reform for now.

This shifts the prospects and need to promote constructive differentiation at the subnational level to other policy measures.